Electronic Commerce and Tax Base Erosion

01-01-1999

This study examines whether there is any evidence, for both 'direct' and 'indirect' taxes, that electronic commerce leads to tax base erosion and the establishment of business in tax havens. The briefing also looks at the impact that the growth of the Internet and electronic commerce may have on the collection of taxes. An analysis is made of the problems which make electronic commerce over the Internet so difficult to tax. This includes the internet's lack of physical location and central control, the problems with auditing and enforcement, the use of electronic money and encryption and the problems associated with mirror servers and disintermediation. A discussion of existing tax law gives an overview of why direct and indirect taxation rules may provide loopholes in the age of electronic commerce.

This study examines whether there is any evidence, for both 'direct' and 'indirect' taxes, that electronic commerce leads to tax base erosion and the establishment of business in tax havens. The briefing also looks at the impact that the growth of the Internet and electronic commerce may have on the collection of taxes. An analysis is made of the problems which make electronic commerce over the Internet so difficult to tax. This includes the internet's lack of physical location and central control, the problems with auditing and enforcement, the use of electronic money and encryption and the problems associated with mirror servers and disintermediation. A discussion of existing tax law gives an overview of why direct and indirect taxation rules may provide loopholes in the age of electronic commerce.

Autore esterno

Max Cash, Robert Schuman Scholar