OECD Conference in Ottawa On E-commerce

Tax-news.com

07 October 1999

An OECD conference in Ottawa on e-commerce tried to set up some preliminary guidelines towards a taxation regime for e-commerce:

• existing principles of taxation should apply
• no discriminatory taxes on e-commerce (this position has already been enshrined in the US Internet Tax Freedom Act)
• governments should adopt consistent principles of Internet taxation
• consumption taxes on cross-border trade should apply at the place of consumption (ie different from VAT on products)
• digitized products are not goods! (i.e. consumption taxes don't apply; in a VAT jurisdiction, the reverse-charge mechanism would apply, as for services)

This last point seems to take on board the reality that people won't self-assess for consumption taxes on down-loaded products; but they won't self-assess for VAT either. So the OECD position seems to leave offshore e-commerce suppliers of down-loadable products in an untaxed position. It may well stay that way until some Government somewhere, worried about tax leakage, and pushed by a producer lobby worried about piracy, decides to do something. But what?

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