British Virgin Islands
Cayman Islands
Cook Islands
Costa Rica
Czech Republic
Hong Kong
Isle of Man
Marshall Islands
The Netherlands
The Netherlands Antilles
New Zealand
Ras Al Khaimah
South Africa
St. Kitts
St. Vincent & The Grenadines
Turks & Caicos Islands
United Kingdom
United States


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- Executive Summary
- Introduction: The Scope of E-commerce Legislation and Regulation
- International Organisations and Anti-Offshore Initiatives
- The E-commerce Laws in High-Tax Countries and Offshore Jurisdictions


- Taxation of Offshore E-commerce
- Offshore E-commerce Facilities
- Offshore Professional and Financial Services
- Offshore E-commerce Applications


- The 'E-Europe' Package
- Proposal for a directive on a common regulatory framework for electronic communications networks and services
- The E-Europe Action Plan
- The E-Commerce Directive



There are four main EU legislative initiatives affecting e-commerce as such.

The 'E-Europe' Package

This Directive, aimed at creating a coherent legal framework for e-commerce development within the Single Market, was finally approved on 4th May 2000.

The directive implemented the principles of free movement of services and freedom of establishment.

The most contentious issue pertained to the liability of on-line service providers; the Directive established an exemption from liability for intermediaries where they play a passive role as a "mere conduit" of information from third parties and limits service providers' liability for other "intermediary" activities such as the storage of information.

The Directive also clarified that the Internal Market principle of mutual recognition of national laws and the principle of the country of origin must be applied to Information Society services.

Place of establishment. The Directive defines the place of establishment as the place where an operator actually pursues an economic activity through a fixed establishment, irrespective of where web-sites or servers are situated or where the operator may have a mailbox.

Transparency. The Directive requires Member States to oblige Information Society service providers to make available to customers and competent authorities in an easily accessible and permanent form basic information concerning their activities (name, address, e-mail address, etc).

On-line contracts. The Directive requires Member States to remove any prohibitions or restrictions on the use of electronic contracts. In addition, it ensures legal security by imposing certain information requirements for the conclusion of electronic contracts in particular in order to help consumers to avoid technical errors.

Commercial communications. The Directive defines commercial communications (such as advertising and direct marketing) and subjects them to transparency requirements.

Implementation. The Directive strengthens mechanisms ensuring that existing EU and national legislation is enforced. This includes encouraging the development of codes of conduct at EU level, stimulating administrative co-operation between Member States and facilitating the setting up of effective, alternative cross-border on-line dispute settlement systems.

Proposal for a directive on a common regulatory framework for electronic communications networks and services

This package of measures was adopted by the Commission in July, 2000. Although some of its components are technical and probably not controversial, some other aspects could be contentious.

The main elements of the package are as follows:

  • Proposal for a directive on universal service and users’ rights relating to electronic communications networks and services;
  • Proposal for a directive on access to, and interconnection of, electronic communications networks and associated facilities;
  • Proposal for a directive concerning the processing of personal data and the protection of privacy in the electronic communications sector;
  • Proposal for a directive on the authorisation of electronic communications networks and services;
  • Proposal for a regulation on unbundled access to the local loop;
  • Proposal for a decision on a regulatory framework for radio spectrum policy in the European Community.

The E-Europe Action Plan

The European Council held in Lisbon on 23/24 March 2000 set the ambitious objective for Europe to become the most competitive and dynamic economy in the world. It recognised an urgent need for Europe to quickly exploit the opportunities of the new economy and in particular the Internet.

To achieve this, the Heads of State and Government invited the Council and the Commission to draw up "…a comprehensive eEurope Action Plan …. using an open method of co-ordination based on the benchmarking of national initiatives, combined with the Commission's recent eEurope initiative as well as its Communication ‘Strategies for jobs in the Information Society'. "

In response to this endorsement the Commission adopted a draft Action Plan on 24th May 2000.

The objectives set out in the Action Plan were:

1. A cheaper, faster, secure Internet

a. Cheaper and faster Internet access
b. Faster Internet for researchers and students
c. Secure networks and smart cards

2. Investing in people and skills

a. European youth into the digital age
b. Working in the knowledge-based economy
c. Participation for all in the knowledge-based economy

3. Stimulate the use of the Internet

a. Accelerating e-commerce
b. Government online: electronic access to public services
c. Health online
d. European digital content for global networks
e. Intelligent transport systems


The E-Commerce Directive

The Electronic Commerce Directive, adopted in 2000, set up an Internal Market framework for electronic commerce, which provides legal certainty for business and consumers. It aims to ensure that Information Society services benefit from the Internal Market principles of freedom to provide services and freedom of establishment and so can be provided throughout the EU if they comply with the law in their home Member State.

The Directive established harmonised rules on issues such as the information online service providers must provide to users (for example postal address and other contact details), commercial communications, electronic contracts and limitations of liability of intermediary service providers.

The Directive's Internal Market clause means that information society services are, in principle, subject to the law of the Member State in which the service provider is established. In turn, the Member State in which the service is received cannot restrict incoming services except in strictly limited circumstances and subject to a specific procedure laid down in the Directive.

The Directive covers all Information Society services, both business to business and business to consumer, and services provided free to the recipient (for example funded by advertising or sponsorship revenue). Examples of online sectors and activities covered include shopping, newspapers, databases, financial services, professional services (such as lawyers, doctors, accountants, estate agents), entertainment services, direct marketing and advertising and internet intermediary services.

A European Commission report in 2003 on the application of the Electronic Commerce Directive, adopted in 2000, concluded that the e-commerce is increasingly vital to the EU economy. According to the report, the Directive, by applying to e-commerce the Internal Market principle of the freedom to provide services, is already "having a substantial and positive effect".

The report emphasised that, given continuing technological innovations and the rapid growth of e-commerce, the Commission will need to keep a close eye on the application of the Directive. It will work with Member States to improve both information to businesses and citizens and the exchange of information among national and European authorities. The global nature of the Internet means that the Commission will also need to strengthen dialogue with international partners so that worldwide rules can be drawn up where necessary.

A further European Commission report on the implementation of the E-Commerce Directive released in early 2004 revealed that the rules have increased interest in online services throughout the Union, boosting the number of internet users expected to shop online by 2006 to 54%.

Although the deadline for implementation of the E-Commerce Directive was 17 January, 2002, implementation by EU member states has been somewhat slow.


OECD Regulations

Although the OECD has no formal regulatory role, it is not infrequently used as a forum by its 29 members, and even by other countries, in which codes of conduct or sets of advisory principles are formulated, which come to have a de facto legal status. The Ottawa conference in October 1998, attended at ministerial level by 40 countries, gave the OECD an agenda in respect of e-commerce which has had two tangible outcomes so far, with others in prospect.

The Guidelines for Consumer Protection in the Context of Electronic Commerce, approved on 9 December 1999 by the OECD’s Council, are designed to help ensure that consumers are no less protected when shopping online than they are when they buy from their local store or order from a catalogue. By setting out the core characteristics of effective consumer protection for online business-to-consumer transactions, the Guidelines are intended to help eliminate some of the uncertainties that both consumers and businesses encounter when buying and selling online.

The OECD supposes that the Guidelines, based on very wide consultation among business and consumer organisations, will play a major role in assisting the development of online consumer protection mechanisms without erecting barriers to trade. The Guidelines reflect existing legal protection available to consumers in more traditional forms of commerce, encourage private sector initiatives that include participation by consumer representatives, and emphasise the need for co-operation among governments, businesses and consumers. Their aim is to encourage:

  • fair business, advertising and marketing practices;
  • clear information about an online business’s identity, the goods or services it offers and the terms and conditions of any transaction;
  • a transparent process for the confirmation of transactions;
  • secure payment mechanisms; fair, timely and affordable dispute resolution and redress;
  • privacy protection; and consumer and business education.

The OECD Privacy Guidelines, which have existed since 1991, represent an international consensus on how best to balance effective privacy protection with the free flow of personal data. Openness is a key principle of the Guidelines, which are flexible and allow for various means of compliance.

To help implement the Guidelines in the electronic world, the OECD has developed the OECD Privacy Policy Statement Generator in co-operation with industry, privacy experts and consumer organisations. The Generator, which has been endorsed by the OECD’s 29 Member countries, aims to offer guidance on compliance with the Guidelines and to help organisations develop privacy policies and statements for display on their web sites.


- Executive Summary - A quick overview of major developments in national and international regulation of E-commerce with special reference to offshore e-commerce.
- Introduction: The Scope of E-commerce Legislation and Regulation - A review of the range of laws impacting the conduct of onshore and offshore e-commerce.
- International Organisations and Anti-Offshore Initiatives - International initiatives from the G7, the OECD and the EU to restrict offshore regimes and their tax-saving possibilities.
- The E-commerce Laws in High-Tax Countries and Offshore Jurisdictions - The laws passed in 'high-tax' countries and links to descriptions of the legislative situation in each offshore jurisdiction.


  Expat Briefing
  Global Incorpoation Guide [GIG]

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