Positions of electronic commerce taxation

1
Positions of electronic commerce taxation

• No activities
• No taxes
• New taxes
• Changes in rules but not principles
• Changes in electronic commerce models

2
USA legal activities in the taxation of e-commerce

• Internet Tax Freedom Act
• Internet Tax Elimination Act
• Critical position
• Regulation of Internet commerce by imposing state
  and local taxes will threaten the growth of
  e-commerce.
• The existing tax system is too complex and
  burdensome.
• The problem of dealing with the issue of nexus
  or physical presence in virtual Internet
  commerce.

3
New taxes

• Financial transaction tax
• GET IT (global electronic commerce tax based on
  information technology)

4
Electronic Commerce Traditional International
Commerce

• Principles of International Commerce Taxation
• Neutrality
• Taxation should seek to be neutral and equitable
  between forms of electronic commerce and between
  conventional and electronic forms of commerce.
  Business decisions should be motivated by
  economic rather than tax considerations.
  Taxpayers in similar situations carrying out
  similar transactions should be subject to similar
  levels of taxation.

5
Electronic Commerce Traditional International
Commerce

• Principles of International Commerce Taxation
• Efficiency
• Compliance costs for taxpayers and administrative
  costs for the tax authorities should be minimised
  as far as possible.

6
Electronic Commerce Traditional International
Commerce

• Principles of International Commerce Taxation
• Certainty and simplicity
• The tax rules should be clear and simple to
  understand so that taxpayers can anticipate the
  tax consequences in advance of a transaction,
  including knowing when, where and how the tax is
  to be accounted.

7
Electronic Commerce Traditional International
Commerce

• Principles of International Commerce Taxation
• Effectiveness and fairness
• Taxation should produce the right amount of tax
  at the right time. The potentional for tax
  evasion and avoidance should be minimised while
  keeping counter-acting measures proportionate to
  the risks involved.

8
Electronic Commerce Traditional International
Commerce

• Principles of International Commerce Taxation
• Flexibility
• The systems for the taxation should be flexible
  and dynamic to ensure that they keep pace with
  technological and commercial developments

9
Electronic Commerce Directive

• In order to allow the unhampered development of
  electronic commerce, the legal framework must be
  clear and simple, predictable and consistent with
  the rules applicable at international level so
  that it does not adversely affect the
  competitiveness of European industry or impede
  innovation in that sector.

10
Seven Criteria for an efficient and equitable
taxation of the e-commerce

• The system should be equitable
• The system should be simple
• The rules should provide certainty
• Any system adopted should be effective
• Economic distortions should be avoided
• The system should be sufficiently flexible and
  dynamic
• fair sharing of the Internet tax base between
  countries.
• Source OECD Observer No. 208, 1997

11
Changes in electronic commerce models

• One of the legitimate functions of a tax system
  is to channel commerce away from forms that are
  hard to tax into essentially equivalent forms
  that are easy to tax.
• McIntyre M. J.