It's a question that governments around the world, including here in the U.K., are asking.

For many, the answer is no - and the solution is a digital tax.

What is a digital tax?

The international tax system hasn't exactly kept up with technology.

Corporate taxes were designed for an era when most businesses sold physical goods in brick-and-mortar shops.

It was easy to track how many products were sold and the tax generated from the sales.

Fast forward a few decades and sales and services have shifted online.

Today, the five most valuable public companies in the world, Microsoft, Amazon, Apple, Alphabet and Facebook are all tech companies.

Meanwhile, corporate tax rates around the world have steadily decreased for 20 years.

Amazon, for example, paid no federal income taxes in 2018, despite bringing in a profit of more than $10 billion.

Those figures have raised some eyebrows among lawmakers.

President Donald Trump and Senator Bernie Sanders have criticized Amazon's tax rate saying the company has an advantage over smaller, brick-and-mortar retailers.

And they're not alone in their criticism.

The chorus in favor of modernizing the tax system for the digital era is growing louder around the world.

Groups like the International Monetary Fund, the European Commission and the Organization for Economic Cooperation and Development have all called for new tax laws to better reflect the fact that many companies do most of their business online.

This is where the idea of a digital tax comes in.

France made headlines this year when it passed a 3% digital tax on big tech companies like Facebook, Amazon and Google. Here's how it works.

The tax applies to any company that makes at least €750 million, roughly $840 million in global annual revenue from “digital activities,” so it automatically singles out a select group of tech giants.

Those companies also need to make €25 million, about $28 million, of their revenues in France.

A digital tax is different from a Value Added tax because it doesn't target consumers.

Instead, it's directly aimed at the companies.

France's digital tax specifically targets two sectors.

The first is digital marketplaces that act as a middleman, connecting customers and businesses, think Amazon.

The second is online advertising, particularly platforms that use personal data for targeting ads, for example Google or Facebook.

The French government says the goal is to make tech companies take on the same tax burden as the local bakery.

I mean, what's more French than the local bakery?

Overall, it hopes the initiative will raise €500 million, about $560 million, per year.

Several countries like the U.K., Italy and Spain are proposing their own version of the French tax.

One reason why? Domestically, there's popular support for the idea.

A survey of U.K. businesses last year found more than half of respondents think the government should impose a new tax on the digital economy, whether other countries are on board or not.

But more than a third worry this would make doing business in the U.K. less internationally competitive.

Some politicians argue it's not the job of foreign governments to tax American companies.

After all, the headquarters of big tech firms like Amazon or Apple are here in the U.S.

The Trump administration launched an investigation into France's digital tax, saying it, "Unfairly targets American companies."

The U.S., and firms like Amazon, say they would prefer a global solution over paying different taxes in every country.

They may have a point. Some tax experts say digital taxes like France's or the U.K.'s could ultimately end up hurting the businesses and people they're trying to protect.

One study found that big tech companies would only pay around 5% of France's digital tax.

The rest would pass onto smaller businesses and consumers who use their platforms.

The study estimated that Amazon, for example, might increase the commission it charges merchants, which could in turn result in higher prices for shoppers.

In May, nearly 130 countries and territories agreed on a plan to overhaul international tax rules.

One big goal is establishing a minimum tax rate for multinational companies.

The plan is to have a deal in place in 2020.

Until then, you can expect more countries to implement digital taxes on their own.

Hey everyone, it's Elizabeth here. Thanks so much for watching.

Let us know what other ideas you have for CNBC Explains in the comments section.

Talk to you later!