Taxing E-Commerce From the Ground Up
The Australian Taxation Office has signalled its intention to tax the internet in a comprehensive report which details the Government's action plan for regulating the collection of sales tax and customs duties for purchases made over the internet. The report concludes that the rising level of overseas purchases via the internet is of particular concern as it could eventually have an adverse effect on tax and customs revenues if action is not taken soon to regulate the taxation of e-commerce in Australia.
"While this report continues to show that current levels of Internet based business activities have little immediate impact on tax revenues, it is important for the Tax Office to be well positioned to take advantage of the opportunities offered by new technology and to meet challenges as they emerge," Acting Tax Commissioner Bruce Jones said when the report was released recently.
However the report does note that long term effective enforcement of taxing e-commerce can only be achieved through international co-operation, and presents a number of discussion papers on jurisdictional issues. In particular, the report singles out the OECD's proposed permanent establishment rule and secrecy rules in offshore e-commerce jurisdictions as issues that need to be addressed.
Unlike the US and the EU, Australia finds itself in the fortunate position of being in the process of reforming its sales tax regime. From 1 July this year, the existing sales tax regime will be revised and a Goods and Services Tax (VAT) will be introduced for the first time. This gives Australia a unique opportunity to design its sales tax system with e-commerce in mind from the ground-up.
As this week's ACEC proceedings in the US and the ongoing EU discussions have shown, the transition from a fragmented, localised tax system to the sort of uniform tax system required to effectively collect taxes on e-commerce is a slow and painful process. It will therefore be interesting to see whether Australia can bring a working e-commerce tax system to the table when the OECD gets around to seriously addressing e-commerce taxation in an international context.
Finding the Right Balance for Internet Gambling
In another report recently published downunder, the Australian Senate recommended a moratorium on the granting of any further internet gambling licences in Australia until new consumer protection laws have been fully implemented.
The Australian internet gambling industry is one of the most successful and well regulated in a sector which has been embroiled in controversy in the UK with betting taxes forcing bookies to move offshore and which in the Carribbean has been legislated out of the US market under harsh new laws that are at best of questionable value as they only address the negative aspects of internet gambling. For anyone with an interest in the future of the internet gambling industry, chapter 5 of the Australian Senate's report is a must read as it provides an informative summary of the different regulatory approaches being pursued in Australia, the UK, Europe, South Africa, the US and the Carribbean.
The Senate Report concludes that "Australia must take into account the benefits and problems that online gambling can bring, and must seek to ensure a regulatory model that provides an appropriate balance between the positive and negative impacts of online gambling," which is a welcome relief from the isolationalist moral majority rhetoric that has been coming out of the US recently.
Australia is taking
a practical approach of regulation instead of prohibition, and
this latest report is merely recommending that expansion of the
internet gambling industry in Australia be put on pause while
regulatory and social issues are resolved, the most pressing of
which is to shift responsibility for regulation from state governments
to the federals government in order to provide a uniform framework.
Related Articles and Resources:
Australia’s Second
Report on Tax and the Internet - David Hardesty
http://www.ecommercetax.com/doc/031900.htm
Tax and the Internet
Second Report - Australian Taxation Office
http://www.ato.gov.au/content.asp?doc=/content/
Businesses/ecommerce_Tati2.htm
Aussie Senate: Freeze
Net gambling - ZD Net
http://www.zdnet.com/zdnn/stories/news/0,4586,2470974,00.html
Netbets - A review
of online gambling in Australia - Australian Senate Select Committee
on Information Technologies
http://www.aph.gov.au/senate/committee/it_ctte/gambling/contents.htm
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