The digitalization of the economy has changed almost everything. It has changed how we buy, how we invest, and how companies provide services. Today, a business can operate in dozens of countries without ever opening a physical office. All it takes is an online platform. All it takes is a server. Sometimes, all it takes is an app.

The problem is that tax systems remain stuck in an old logic. They were designed for factories, warehouses, and physical stores. For an economy that depended on geographical presence. Not for a digital and global world.

Often the debate focuses on a simple question: how to tax digital companies?

But perhaps the most important question is another.

How to make the economy competitive enough to attract these companies?

Much of the public discussion insists on the idea that large technology platforms pay little tax in the countries where they operate. In many cases this is true. They manage to structure their activity across multiple jurisdictions and end up paying taxes where the tax framework is most favorable.

The political reaction is usually immediate: creating new rules, new taxes, new collection mechanisms.

But this approach raises a dilemma.

In a digital world, capital and services move easily. Companies choose where to invest. They choose where to establish themselves. They choose where to declare part of their activity. If a country becomes excessively burdensome from a fiscal or bureaucratic point of view, the result can be simple: investment goes elsewhere.

Therefore, perhaps the real debate is not just fiscal.

It’s economic.

And strategic.

Portugal faces the same challenge as many European countries. You want to ensure fiscal fairness. You want to collect revenue. But at the same time, you need to create an environment that is attractive to technology companies, startups, and digital platforms.

If the focus is only on increasing taxation, there is a risk of driving away innovation and investment.

Another relevant point is related to the structure of the economy itself. Small and medium-sized Portuguese companies continue to bear a significant part of the tax burden. Many operate only in the domestic market. They do not have international structures. They lack the capacity for global tax planning.

Large digital companies operate differently. They operate in networks. They distribute activities across multiple countries. They use complex legal structures.

The result is a system that appears unequal.

But the solution may not lie solely in trying to tax multinationals more. It may lie in reducing obstacles and increasing competitiveness for everyone.

The digital economy has also brought new challenges, such as crypto-assets and data-driven business models. Portugal has already begun creating rules to tax some of these assets. Still, the market evolves much faster than the legislation.

Regulation is necessary.

But over-regulation can stifle innovation.

Perhaps it would be useful to change the starting point of the debate.

Instead of simply asking “how to tax the digital economy more,” perhaps we should ask:

– How to make Portugal a competitive hub for technology companies?

– How to simplify the tax system?

– How to encourage investment, talent, and innovation?

In a world without digital borders, countries compete with each other. They compete for companies. They compete for talent. They compete for investment.

Taxation is only one part of the equation.

A strong economy is not built solely through tax collection. It is built through productivity, innovation, and business competitiveness.

And in this field, there is still much work to be done.