Abstract

The rapid expansion of digital services has created significant challenges in the realm of taxation, particularly for multinational corporations operating in diverse jurisdictions. This paper proposes a comprehensive model for optimizing digital service taxation compliance in alignment with multinational financial reporting standards. The model aims to address the complexities of taxing digital services by focusing on digital tax reporting mechanisms, compliance tracking, and the harmonization of tax codes across borders. The paper reviews existing literature on digital taxation, financial reporting standards, and compliance mechanisms, identifying gaps in research and providing a foundation for the proposed model. Through case studies and practical applications, it highlights the successes and challenges faced by multinational corporations and governments in implementing digital service taxation compliance frameworks. The proposed model offers a more efficient, transparent, and harmonized approach to digital service taxation, reducing the risk of tax avoidance and improving compliance. Finally, the paper concludes with recommendations for future research and potential improvements to the model, particularly in the context of emerging technologies and evolving international tax regulations. This paper offers a significant contribution to the growing discourse on digital tax reform, providing actionable insights for policymakers and businesses navigating the complexities of the digital economy.