Taxation of E-Commerce
E-Commerce leads to new challenges in taxation. This Web-Site provides information on the international legal developments.
Contact: Dr. Jörg Hladjk, LLM.
Introductory Material:
Deutsche Bank Research Paper: Taxation of e-commerce - looking for solutions, August 1, 2002 by J. Quitzau
Taxation of E-Commerce - Part 1, September 2000, by Prof. A. Nellen
Taxation of E-Commerce - Part 2, September 2000, by Prof. A. Nellen
Taxation of E-Commerce: Persistent Problems and Recent Developments, 2000 by Bach/Hubbert/Müller
EU
Council Directive 2002/38/EC of 7 May 2002 amending and amending temporarily Directive 77/388/EC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services
Annex I: Illustrative list of electronically supplied services referred to in Article 9(2)(e)
Council Regulation (EC) 792/2002 of 7 May 2002, temporarily amending Regulation (EEC) 218/92 on administrative cooperation in the field of indirect taxation (VAT) as regards additional measures regarding electronic commerce
introduces additional measures necessary for the registering of foreign e-service traders for VAT purposes and for distributing the VAT receipts to the Member States where the services were actually used
Interim report on the implications of electronic commerce for VAT and Customs, 1998 by the Working Party I (Harmonisation of turnover taxes), European Commission
COM (1998) 374 final on electronic commerce and indirect taxation, Communication by the Commission to the Council of Ministers, the European Parliament and the Economic and Social Committee and the Committe of the regions
USA
Internet Tax Nondiscrimination Act, (Public Law No: 107-75) was signed by President Bush in December 2004
The Act reinstates and extends until November 1, 2007, the moratorium on taxes on Internet access and multiple and discriminatory taxes on e-commerce imposed by the Internet Tax Freedom Act (ITFA). The moratorium applies to taxes on Internet access, regardless of whether the tax is imposed on a provider or buyer of Internet access, and regardless of the terminology used to describe the tax. However, taxes levied upon or measured by net income, capital stock, net worth, or property value are permissible. In addition, the moratorium does not apply to taxes on telecommunication services, except to the extent that such services are purchased, used or sold by a provider of Internet access to provide Internet access. The moratorium also contains an exception for the imposition of tax on a charge for voice or similar services utilizing Internet Protocol or any successor protocol (Voice over IP). However, services that are incidental to Internet access, such as voice-capable e-mail or instant messaging, are covered by the moratorium.
H.R. 1552 to extend the moratorium to November 1, 2003 was signed by President Bush on November 28, 2001.
General Accounting Office: Update on State and Local Revenue Loss From Internet Sales, November 6, 2001
Joint Committee on Taxation - Overview of Issues Related to the Internet Tax Freedom Act and of Proposals to Extend or Modify the Act, July 30, 2001
General Accounting Office: Sales Taxes - Electronic Commerce Growth Presents Challenges; Revenue Losses Are Uncertain, June 2000
Advisory Commission on Electronic Commerce (set up by ITFA): Report to Congress, April 2000
Internet Tax Freedom Act (ITFA) 1998
Moratorium in Sec. 1101:
No State or political subdivision thereof shall impose any of the following taxes during the period beginning on October 1, 1998, and ending 3 years after the date of the enactment of this Act-- (1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998; and
(2) multiple or discriminatory taxes on electronic commerce.
US Treasury Department: Paper on Selected Tax Policy Implications of Global Electronic Commerce, November 1996
OECD
Implementation of the Ottawa Taxation Framework Conditions - The 2003 Report
Business Profits TAG: Are The Current Treaty Rules For Business Profits Appropriate For E-Commerce? Public Discussion Draft, 26 November 2003
Place of Effective Management Concept: Suggestions For Changes To The OECD Model Tax Convention - Discussion draft, 27 May 2003
The Challenge of E-commerce to the Definition of a Permanent Establishment: The OECD’s Response, 2002, by Dr. J-P. Chetcuti.
Permanent Establishment
Discussion draft on attribution of profits to a Permanent Establishment (2001)
Discussion on comments received by the TAG (November 2001)
Tax Treaty Characterization Issues Arising from Electronic Commerce (February 2001)
Electronic Commerce: Taxation Framework Conditions, A report by the Committee on Fiscal Affairs, as presented to Ministers at the OECD Ministerial Conference, "A Borderless World: Realising the Potential of Electronic Commerce" on 8 October 1998 (Ottawa)