Last week's headline news that California Governor Gray Davis has vetoed a bill that would have required sales tax to be levied on online purchases made by state residents seems to have done little to deter the South African Revenue Service (SARS), which has incorporated aggressive Internet information requirements into its business tax regime, setting the stage for greater government intervention into the e-business sector.
No doubt all governments view e-commerce as representing a serious source of tax leakage, agonising over the millions in lost potential revenue, but the South African government has put its mouth where its money is: Conjuring up a vision of the archetypal jealous bureaucrat from central casting, the South African Receiver of Revenue has incorporated new and extensive e-commerce reporting requirements into tax returns for the 1999 tax year.
Companies are now required to disclose the level and sources of revenues derived from all Internet business transactions. And as if these requirements weren't "taxing" enough in themselves, SARS has added the far more onerous and intrusive demand that companies should report the web addresses of all their major Internet clients.
If any rule could be devised to encourage the maximum amount of evasive behaviour on the part of tax-paying companies, this must surely be it. Penny-wise, pound foolish, indeed!
Not the least of many concerns over this new ruling is that adminstration expenses will rocket, reducing the margins of Internet start-up companies and placing further pressure on the sector, which this year has seen a rollercoaster ride of both success and serious instability.
In a report on a leading South African Internet industry portal sa.internet.com, one unnamed Internet expert suggested it is not a simple task to configure e-business to fit existing tax rules established for traditional business models. He said: 'The situation is far more complex when it comes to the Internet. While there are laws governing where a traditional deal is concluded and hence which regulatory authority is due the tax, the flexibility and dynamism which the Internet affords commercial transactions raises the stakes.' He cites e-mail and remote server considerations as two examples of the new set of challenges facing would-be e-business regulators.
The South African government is in the midst of drawing up an e-commerce White Paper, and has indicated that it intends to incorporate some form of guidance on e-commerce taxation into it. However, observers expect the government to meet exactly the same e-tax hurdles that other countries have encountered. The decision in California last week was a huge setback for e-tax backers and, on the other side of the pond, the European authorities have been forced to withdraw a controversial "bit tax" after objections from e-commerce stakeholders.
Internet analysts hope that 'small' amendments such as the (un)necessary reporting for the 1999 Tax Returns will be as far as regulation goes. One said: 'Some regulation is obviously necessary as the Internet increases the ability to manipulate prices across national borders with varying tax measures but in imposing these measures, governments will need to be wary of alienating businesses which could potentially boost their country’s GDP.'
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment