Positions of electronic commerce taxation 1. No activities 2. No taxes 3. New taxes 4. Changes in rules but not principles 5. Changes in electronic commerce models

USA legal activities in the taxation of e-commerce Internet Tax Freedom Act Internet Tax Elimination Act Critical position: 1. Regulation of Internet commerce by imposing state and local taxes will threaten the growth of e- commerce. 2. The existing tax system is too complex and burdensome. 3. The problem of dealing with the issue of “nexus” or “physical presence” in “virtual” Internet commerce.

New taxes  Financial transaction tax ;  GET – IT (global electronic commerce tax based on information technology);

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.

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.

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.

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.

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

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.

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

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.