Japanese Newspaper Rubbishes OECD's Ideas For E-Commerce Taxation

Mary Swire, Tax-news.com, Hong Kong

16 May 2000

An editorial in Japan's Yomiuri Shimbun newspaper today tackles the question of how to tax Internet e-commerce transactions, and comes up empty-handed, like everyone else. In Japan, as in most countries, sales of digital goods to consumers are outside the tax net altogether at present.

The newspaper reports that governments around the world are having problems in developing workable models of e-commerce taxation. The editorial lists the taxation models being studied by the OECD:

-- Consumers would be asked to voluntarily report their taxable purchases to tax authorities.

-- Corporations that have sold goods to consumers outside their countries would be registered with tax authorities in the consumers' nations, so they would be obliged to pay taxes on the products sold.

-- Banks and other clearinghouses involved in e-commerce transactions would be required to pay necessary taxes.

Says the newspaper:

'However, the duty of consumers to voluntarily declare their purchase of taxable goods undoubtedly will mean that they will be exempt from taxation. Dealers and clearinghouses would be able to get away without paying tax if they were based in tax havens. Conversely, tax authorities could hamper the ongoing progress in the IT revolution if they were allowed to intervene excessively in e-commerce.'

The editorial finishes with the pious hope:

' . . . that the OECD will put together a simple and workable formula for taxation on e-commerce trading. The world body also should work hard to deal with problems arising from tax loopholes provided by tax havens.'

So get stuck in, you loafers in Paris. Why has it taken you so long to come up with the answers? Too many lunches at the Coupole?

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