LINKS
IN THIS SECTION
- US
Sales and Use Taxes and E-commerce
- European Union VAT
and E-commerce
- Corporation Tax and
E-commerce
RELATED
SECTIONS
-
Regulation
of Offshore E-commerce
- Offshore
E-commerce Facilities
- Offshore
Professional and Financial Services
-
Offshore E-commerce Applications
This section is
designed to present a basic outline of the taxation
of e-commerce, and specifically offshore e-commerce,
for those involved in it. The term 'e-commerce'
is understood here to mean, commercial transactions
taking place on the Internet.
E-commerce has
raised many new issues for governments, tax
authorities, legislators and the courts, and
of these by far the most challenging has been
the question of taxation. The growth of offshore
e-commerce has added an extra layer of difficulty.
As the sector began
to develop, both internationally and domestically,
rich-country (high-tax) Governments began to
feel seriously threatened by tax leakage via
e-commerce, especially the offshore variety,
tending to share the view that e-commerce undermines
key concepts used in the existing structure
of taxation.
The US has extended
its moratorium on new e-commerce taxation until
November 2007, but individual states have found
a way to impose existing taxes on electronic
transactions. Both the EU and the US, along
with other OECD countries, have attempted to
limit the activities of offshore jurisdictions,
partly in response to fears about the growth
of offshore e-commerce.
Pending global
legislation (and it may be a long wait) e-commerce
is taking place under the law as it stands.
Difficulties and ambiguities arise because many
of the terms and concepts used in current tax
law, such as 'source of supply' or 'permanent
establishment', lose their clarity when applied
to e-commerce. The two types of taxation that
raise most issues for those doing business on
the Internet are corporation tax, and VAT or
sales tax.
Government attempts
to limit the benefits to be gained from offshore
e-commerce have so far mostly been ineffective,
although the EU's proposed e-commerce VAT reforms
may have an impact on low VAT jurisdictions
within the EU, such as Madeira. However, as
a general proposition, almost any business involved
in e-commerce can gain from moving partly or
wholly offshore, not just on a fiscal level
but also through increased flexibility. The
Offshore E-commerce
Business Guide offers specific guidance
on the use of e-commerce to many different types
of business depending on their situation.
LINKS
IN THIS SECTION
- US
Sales and Use Taxes and E-commerce - US
taxation of onshore and offshore e-commerce
transactions including recent legislative developments.
- European Union VAT
and E-commerce - EU taxation of onshore
and offshore e-commerce transactions including
recent legislative developments.
- Corporation Tax and
E-commerce - The impact of corporate taxes
(income or corporation tax) on the profits of
e-commerce, the location of servers and business
units onshore and offshore.
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