This study examines the challenges and opportunities of e-commerce taxation in the digital economy, focusing on the need for innovative tax policies and technological advancement. The research design involves a comprehensive review of literature to analyze key issues such as tax jurisdiction, digital goods valuation, legal arbitration, and the application of Digital Services Tax (DST). This approach synthesizes findings from academic articles, reports, and policy documents to provide deep insights into the complexities surrounding e-commerce taxation. The findings highlight the importance of international cooperation, technological innovation, and well-designed tax measures in addressing the challenges posed by the digital economy. Discussions emphasize the significance of harmonizing tax policies, leveraging digital solutions such as e-invoicing and real-time reporting, and implementing DST to ensure effective taxation of digital enterprises.