fficult to enforce since the ‘offenders’ will be based in another country outside the EU.
Failure to register may have serious consequences since, for example, the EU has stated that a company in that position will lose its intellectual property rights.
Some e-commerce software does not record the purchaser’s address (possibly because the product is actually a download and therefore there is no need to gather such information) so the supplier may find it difficult to identify whether the customer actually resides in the EU. The supplier then may find it difficult to account to the relevant tax authority. This factor may discourage the non-EU supplier from supplying goods and services to customers within the EU and thus frustrate the growth of e-commerce within the EU. Alternatively, if the non-EU supplier decides to continue selling products, goods and services to EU citizens, the use of cookies and retention of customer details may raise privacy and data protection concerns.
The new rules undoubtedly make a distinction between physical and virtual goods. This distinction may be inequitable in some circumstances, such as when educational books for cash strapped schools are zero-rated and yet the downloadable e-book version is subject to VAT.
Other concerns about the new law revolve around the international effect(s) of the law. The OECD are even now only in the process of preparing draft rules on this issue. The EU has somewhat prejudged the issue by dec英语论文网 【http://www.51lunwen.org】iding to forge ahead with its own approach towards tax and e-commerce. The extra-territorial effect of the law may violate the general principle of international comity that a state should only tax legal and natural persons outside the jurisdiction if it is reasonable to do so. Also, the EU’s approach may result in [similarly] retaliatory measures from other trading partners. This unilateral protectionist rule may also be alleged to be in violation of the WTO’s rules on non-discrimination and most favoured nation status.
Lastly, the perception of other trading partners may be that this law is an internet tax in all but name.
Solutions?
Payment companies receiving and subsequently distributing the tax revenues?
Collecting customs duties when the order is made rather than being imposed ex post facto?
Topic Activities
Identify the problems faced by tax authorities when deciding upon an appropriate response to taxing e-commerce activities.
Should e-commerce be subject to the pre-existing tax law regime or does the sui generis nature of e-trading justify a new approach?
Should the EU have introduced its Directive on VAT and e-commerce?
Further Reading
Conceptual problems of the international taxation of e-commerce transactions, Haase. T.P.I.I.T. 2005, 3(2), 7-9
To Tax or Not to Tax? That is the question? Overview of Options in Consumption Taxation of E-Commerce, Basu, JIL
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