E-commerce is poised to take off as consumers take advantage of comparison shopping, niche markets, and, importantly, the tax-free status of goods bought and sold over the Internet. E-commerce taxation: direct tax issues The e-commerce industry in India has witnessed exponential growth in terms of volumes and revenue and is expected to grow to over USD 15 billion by the end of 2015. Other estimates, based on different data, projected the 2011 so-called e-commerce volume at approximately $3.9 trillion. For instance, if a particular income is classified as royalties or fees for technical services, or dividends or interests, then irrespective of the existence of a permanent establishment, the income will be liable to host country taxation under section 115A of the Income-tax Act, 1961. (ii) Contiguous Zone – 24 nautical miles beyond and adjacent to the territorial waters from the base line. Introduction. The problem of dealing with the Quill decision and the issue … Concerns of governments centre on the impact of e-commerce on the state and local revenue. In some other case, the place where the buyer normally resides decides the law to be applied. The major ethical, social, and political issues that have developed around e commerce over the past seven to eight years can be loosely categorized into four major dimensions: information rights, property rights, governance, and public safety and welfare . This will create problems relating to the law that will be applicable in case of dispute. By closing this message, you are consenting to our use of cookies. This situation also makes it difficult to determine the limits of power of … Cited by lists all citing articles based on Crossref citations.Articles with the Crossref icon will open in a new tab. Nature of contract: A contract need not necessarily be in writing unless, the statute requires it to be so. ( 800. ISSUES AND PROBLEMS IN TAXING E-COMME RCE TRANSACTIONS Due to absence of national boundaries, physical presence of goods and non-requirement of physical delivery, taxation of e … Taxable jurisdiction: The taxable jurisdiction of any country covers its national boundary. International taxation arises from cross border transactions for the reason that the author of the transactions arises in one country (called the Home State) and the sites of the transactions … Register to receive personalised research and resources by email, Taxation of Electronic Commerce: A Developing Problem, /doi/pdf/10.1080/13600860220136093?needAccess=true, International Review of Law, Computers & Technology. In a contract, generally the parties are free of choose the law applicable to the contract and the same can be expressed or implied in the terms of the contract. The following are the limits indicated therein: (i) Territorial Water -12 nautical miles from the nearest point of appropriate base line. Taxation of e-commerce is an important issue for countries, businesses and consumers who want to be a party of e-commerce. The shift from a physically oriented commercial environment to a knowledge-based electronic environment poses serious and substantial issues in relation to taxation and taxation … The real problem for enforcement in an E-Commerce situation arises in transactions involving online delivery and payment, which is growing at a fast pace. Registered in England & Wales No. It can in all probability be in a tax-haven country. How to determine existence of a permanent establishment : Under most bilateral double tax treaties, a country will seek to tax corporate business profits if they can be applied to a ‘permanent establishment’ in that country. In answering this, the Rome Convention says that if the contract accords with the rules of anyone of the States, its validity cannot be questioned. E-commerce is a popular term for electronic commerce or even internet commerce. Section 9 provides that income is deemed to accrue or arise in Indian taxable territory if there is a business connection. It will particularly analyze e-commerce taxation … That amount was 16.1% of all U.S. shipments and sales in that year. NOTIFIED COST INFLATION INDEX UNDER SECTION 48, @thei, Transfer of certain sums to capital redemption reserves account (section 69), Status of Application for Verification of Marks/Inspection of Answer Book(S) / Supply of Certified Copy(ies) of Answer Book(S) – December, 2019 Examination, Finance Minister Smt. (See the Spring 1999 GBR for an expanded discussion of these options.) Where there is a clause for retention of title until the buyer performs some act, then the matter of which lexsitus will govern the validity clause is open to question. e-commerce and taxation final editing 1. taxation of electronic commerce: prospects and challenges for nigeria by sanusi abubakar olalekan matric no: 09/40ia079 being a long essay … The basic requirement is, therefore, that there must be a place of business and it must have some permanence. Hence, there is a check on these transactions, though smuggling remains outside the scope of any control. The difficulty is not so much in taxing those who are assessed and who maintain accounts but in taxing others who do business and there is no record of their transactions, like the persons liable to pay the ‘use tax’ in US. In such cases, the natural option should be to tax the resident as the agent, especially where the non-resident cannot be reached. Even in the present situation, the tax authorities are unable to fully grapple with the problem of myriad ways of tax evasion. But electronic commerce takes place through satellite and the server can be in any part of the globe. (iii) Continental Shelf – 200 nautical miles from the base line. This would be the most satisfactory solution and can be followed. In some cases, the principal place of business is relevant in deciding the law applicable. Therefore the Source Rule as laid down in section 9 of the Income-tax Act, 1961 can be clearly applied to effect Host State taxation. This becomes meaningless with the Internet access. In E-commerce situations, with transactions being completed in cyberspace, it is often not clear as to the place where the transaction is effected, giving rise thereby to difficulties in implementing Source Rule taxation. They have to be understood in the light of international taxation. the historical development of the application of national tax laws to e-commerce. These problems will be greater for developing countries. transactions were conducted over the Internet in 2010. Imposing regulations on online retail might be excessively difficult right now, but as the percentage of sales transactions shift toward the virtual and away from the physical, governments will … This makes the place of origin of business invisible thus adding complication to the existing scenario and is a real challenge to domestic jurisprudence. This problem is generally solved by a Double Taxation Avoidance Agreement (DTAA) between the two countries concerned. That same basic logic has been applied to the taxation of e-commerce sales, whereby internet retailers are only legally required to charge sales tax in states where they have a physical … The existing tax system is too complex and burdensome. 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