Key points of cross-border e-commerce

Cross-border e-commerce refers to a kind of international commercial activity in which transaction subjects belonging to different customs borders reach transactions, make payments and settlements through e-commerce platforms, and deliver commodities and complete transactions through cross-border logistics.

Cross-border e-commerce features and key points:

(I) Global Forum

The network is a medium without boundaries, with global and non-centralized characteristics. Cross-border e-commerce, which depends on the network, also has the characteristics of globalization and decentralization. E-commerce compared with the traditional way of trading, one of its important features is that e-commerce is a borderless transaction, the loss of the traditional transaction has the geographical factors. Internet users do not need to think about crossing national borders to submit their products, especially high value-added products and services, to the market. The global nature of the Internet has the positive effect of maximizing the enjoyment of information, and the negative effect of exposing users to risks arising from cultural, political and legal differences. Anyone with certain technological means, at any time and from any place, can make information accessible to the network and interconnect it for transactions. The United States Department of the Treasury, in its fiscal report, pointed out that taxing e-commerce activities based on globalized networks was difficult because: e-commerce was based on virtual computer space, which lost the geographic element of traditional transactions; and manufacturers in e-commerce tended to hide their domiciles, which were of little concern to consumers. For example, a very small Irish online company can sell its products and services over the Internet through a web page that can be clicked on by consumers anywhere in the world, as long as they have access to the Internet. It is difficult to define exactly within which country this transaction takes place.

This development of remote transactions creates many difficulties for tax authorities. Tax authority can only be exercised strictly within a country, and this characteristic of the Internet makes it difficult for tax authorities to exercise tax jurisdiction over online transactions that transcend a country. Moreover, the Internet sometimes plays the role of an intermediary. Whereas the traditional transaction model often requires the presence of a physical point of sale, for example, selling a book to a reader through a bookstore, an online bookstore can replace the bookstore as the point of sale and complete the entire transaction directly. The problem is that tax authorities often rely on these outlets for basic information needed for tax purposes, withholding and payment of income tax, and so on. Without the existence of these sales outlets the exercise of tax power will also be difficult.

(ii) Intangibility (Intangible)

The development of networks has made the transmission of digitized products and services prevalent. Digital transmission takes place through the centralization of different types of media, such as data, sound and images, in a globalized network environment, where these media appear as computer data codes and are therefore intangible. Taking the transmission of an e-mail message as an example, this message is first broken down into millions of packets by the server, and then transmitted to a destination server and reorganized to be forwarded to the receiver through different network paths according to the TCP/IP protocol, and the whole process is done instantly in the network. E-commerce is a special form of digital transmission activity, and its intangible nature makes it difficult for the tax authorities to control and check the seller's transaction activities, and the tax authorities are confronted with transaction records that are embodied in the form of data codes, which makes it impossible for the tax verifier to accurately calculate the sales proceeds and profit proceeds, thus making it difficult to collect taxes.

Digitized products and services based on the characteristics of digital transmission activities are also bound to have intangible, the traditional transaction to physical transactions, while in e-commerce, intangible products can replace the physical object to become the object of the transaction. Take books as an example, the traditional paper books, its typesetting, printing, sales and purchase is regarded as the production and sale of products. However, in e-commerce transactions, consumers can use the knowledge and information in the book as long as they purchase online data rights. And a series of issues such as how to define the nature of that transaction, how to supervise it and how to tax it have brought new issues to the tax and legal departments.

(C) Anonymity

Because of the decentralized and global nature of cross-border e-commerce, it is difficult to identify e-commerce users and their geographic locations. Consumers transacting online often do not display their true identity and their geographic location, and importantly this does not affect the transaction in any way, and the anonymity of the Web allows consumers to do so. In a virtual society, the convenience of anonymity quickly leads to an asymmetry of freedom and responsibility. People can enjoy the greatest freedom while assuming the least responsibility, or even simply avoiding it. This obviously creates problems for the tax authorities, who are unable to identify and geographically locate taxable online traders, and thus are unable to obtain information on the taxpayer's transactions and the amount of tax payable, not to mention auditing and verification. That part of the transactions and taxpayers are invisible in the tax authorities' view, which is fatal to the tax authorities. Take eBay as an example. eBay is an online auction company in the United States that allows individuals and merchants to auction off any items. eBay has 30 million users so far, auctioning off tens of thousands of items every day, with a total turnover of more than 5 billion dollars. But most of eBay's users don't accurately report their earnings to tax authorities, and there's a lot of tax evasion because they know that because of the anonymity of the Web, the U.S. Internal Revenue Service (IRS) has no way of identifying them.

The anonymity of e-commerce transactions has led to worsening tax evasion, and the growth of the Web has made e-commerce tax avoidance easier and more accessible by lowering the cost of tax avoidance. The anonymity of e-commerce transactions makes it possible for taxable persons to use on-line financial institutions in tax havens to avoid tax regulation. The widespread use of electronic money and the "complete tax protection" provided by the Internet to customers of certain tax haven online banks allow taxpayers to remit their investment income originating in various countries around the world directly to tax haven online banks, thus avoiding the income tax payable. In one of its largest audits, the United States Internal Revenue Service (IRS) found that a large number of resident taxpayers had hidden large amounts of taxable income through financial institutions in offshore tax havens. And the U.S. government estimates that about three trillion dollars is hidden in tax havens because of the "full tax protection" of on-line banks in tax havens.

(4) Instantaneously

For the Web, the speed of transmission is independent of geographic distance. The traditional mode of transaction, information exchange methods such as letters, telegrams, faxes, etc., between the sending and receiving of information, there are different lengths of time difference. E-commerce information exchange, regardless of the actual spatial and temporal distance, a party to send information and the other party to receive information is almost the same time, as in life face-to-face conversation. Some digital products (such as audio-visual products, software, etc.) of the transaction, but also instant settlement, ordering, payment, delivery can be completed in an instant.

The immediacy of e-commerce transactions improves the efficiency of people's interactions and transactions, eliminating the need for intermediary links in traditional transactions, but also hides a legal crisis. In the field of tax performance: the immediacy of e-commerce transactions often lead to the arbitrariness of the transaction activities, e-commerce subject of the transaction activities may start at any time, at any time, terminate at any time, at any time, change, which makes it difficult for the tax authorities to grasp the specific transactions between the two sides of the transaction, not only make the source of tax withholding means of control failures, but also objectively contributes to the taxpayers do not comply with the tax law of the arbitrariness of the tax field of modernized collection and management technologies, coupled with the serious lag in the tax The serious lagging effect of the modernization of the field of collection and management technology, all make the rule of law tax pale in comparison.

(E) paperless (Paperless)

E-commerce is mainly paperless operation, which is the main feature of the transaction in the form of e-commerce. In e-commerce, electronic computer communication records replace a series of paper transaction documents. Users send or receive electronic information due to electronic information, in the form of bits of existence and transmission, the entire process of sending and receiving information to achieve paperless. The positive impact of paperless is to make information transfer from the limitations of paper, but because many of the norms of traditional law is to regulate the "paper transaction" as a starting point, therefore, paperless brought a certain degree of legal confusion.

E-commerce with digital contracts, digital time to intercept the traditional trade in written contracts, bills, weakening the ability of the tax authorities to obtain cross-border taxpayers' business status and financial information, and other confidentiality measures used in e-commerce will increase the difficulty of the tax authorities to get hold of the taxpayer's financial information. In the absence of evidence of certain transactions, the amount declared by multinational taxpayers will be greatly reduced, and the amount of taxable income and taxes levied will be less than the actual amount achieved, thus causing international tax revenue loss in the taxing country. For example, one of the traditional taxes commonly levied by countries around the world, stamp duty, the object of taxation is the written vouchers provided by the parties to the transaction, the tax link for a variety of legal contracts, vouchers, or made, and in the case of the network transactions paperless, the material form of the contract, the form of the vouchers no longer exists, and thus the contract of the stamp duty, vouchers, decal (i.e., the completion of the act of payment of the stamp duty) will be unable to start.

(F) Rapidly Evolving (Rapidly Evolving)

The Internet is a new thing, at this stage it is still in its infancy network facilities and the corresponding software protocols for the future development of a great deal of uncertainty. But what tax lawmakers must consider is that the Internet, like other newborns, is bound to evolve at an unprecedented rate and in unpredictable ways. Internet-based e-commerce activities are also in the process of rapid change, in just a few decades electronic transactions have undergone a process from EDI to the rise of e-commerce retailing, and digital products and services are even more new and constantly changing human life.

And in general, countries pay attention to maintaining the continuity and stability of the law in order to maintain the stability of the society, and the tax law is no exception. This will give rise to the network's super-rapid development and tax legal norms of the relative lag of the contradiction. How to incorporate the network transactions, which are in the process of development and change every minute and second, into the regulation of tax law is a difficult problem in the field of taxation. The development of the network constantly brings new challenges to the tax authorities, and the tax policy makers and the tax law legislature should pay close attention to the development of the network, and take this factor into full consideration when formulating tax policies and tax law norms.

Transnational e-commerce has many characteristics different from traditional trade methods, while the traditional tax law system is generated under the traditional trade methods, which will inevitably be full of loopholes in e-commerce trade. The network has profoundly affected human society, but also to the tax legal norms have brought unprecedented impact and challenges.