Digital transformation has stimulated the development of the digital economy, which is becoming one of the key branches of the economy today. According to the definitions of digital transformation, the digital economy can be defined as a new business area in which, with the help of various technologies, the performance of entrepreneurs is improved and new opportunities for successful business are created. The development of the digital economy has prompted the European Union to launch the Single Digital Market (SDM) strategy, which aims to enable the free movement of goods, services and capital, as well as unhindered access to activities on the Internet by individuals and companies. With the emergence of the digital economy, an increasing number of companies are appearing, which encounter the problem of taxation of digital business. The European Commission and the Organization for Economic Co-operation and Development (OECD) work together to solve the problems of taxation in the digital economy and to introduce a unified tax system for all countries that do business digitally. The challenges of taxation of the digital economy arise through direct and indirect taxes. The challenge in the taxation of direct taxes arises due to the taxation of profits according to traditional taxation standards, which leads to shifting of profits and tax avoidance. The indirect tax challenge arises due to the new way of selling and consuming goods and services, which leads to problems in the VAT taxation of these goods and services. In order to solve the problem of taxation of digital companies, the participation of all members of the digital economy is necessary in order to come up with an adequate single solution that would prevent the emergence of problems and endangering the performance of digital activities.