Tax issues

It is understood that, in fact, since 2002, the IRS has begun to study the management of Internet transaction tax, but due to the difficulty of personnel and operation, the study has not been significant progress up to now, in your opinion, e-commerce tax issues, the technical feasibility of the difficulty of the main where? Can it be solved in the near future? A: Due to the virtual and trans-regional nature of e-commerce, the taxation of e-commerce, especially the taxation of digital product e-commerce and transnational e-commerce, has always been a difficult problem for the governments of various countries. Developed Western countries, led by the United States, have been advocating the postponement of the payment of import taxes levied on cross-border e-commerce. As early as 1998, the U.S. government submitted a proposal (WT/GC/W/7) to the World Trade Organization (WTO) to continue the practice of not imposing import duties on e-commerce at that time. The United States was the first country to propose to the World Trade Organization (WTO) that electronic transactions be exempted from import duties. 1998, the World Trade Organization (WTO) in order to stimulate the development of e-commerce, in the e-commerce work plan provides for the deferral of payment of import duties levied on e-commerce. The Japanese government also advocates the continuation of the existing practice of not imposing import duties on electronic transactions, and advocates the consideration of the issue of import duties on electronic transactions from a legal and technical point of view. In 1997, the European Union (EU) put forward a proposal for a "bit tax" on e-commerce. Most EU countries are consumers of cross-border e-commerce. The "bit tax" is a tax on the volume of information that Internet users transmit over the Internet. Telecommunications companies can record and tax the number of bits of information traffic in each electronic transaction through telephone lines, cables, fiber optics, and satellites. The "bit tax" is simpler and fairer than taxing the monetary value of electronic transactions. However, the "bit tax" requires a distinction between e-commerce and non-e-commerce information traffic, which is difficult to accomplish in practice. Most developing countries are in favor of not taxing products and services exchanged electronically at this time, taking into account the boost that the development of e-commerce provides to the national economy. Although developing countries rely mainly on import duties to increase government revenues to meet various development objectives, now that neither import duties nor value-added taxes (VAT) are levied on products exchanged electronically, such as software, music and products, developing countries are not losing out on e-commerce taxation. Moreover, since developing countries will remain net importers of e-commerce in the short to medium term, the potential tax loss from e-commerce is much greater for developing countries than for developed countries. However, the development of e-commerce offers great potential for expanding markets and increasing productivity and competitiveness, and it brings many benefits to the development of the country's economy as a whole. Consequently, governments in developing countries do not believe that it is time to recklessly impose taxes directly on products and services exchanged through electronic means. The loss of tax revenues from e-commerce should be compensated for by promoting the maximization of e-commerce in the area of products and services and its rapid expansion into international e-commerce markets. Governments in many developing countries believe that taxing the growing revenues from electronic transactions will be a great challenge. Challenges include: technical and institutional capacity to oversee electronic transactions; problems of specialized personnel; problems of implementation and enforcement in a number of informal areas; and problems of infrastructure for communication systems These problems are similarly present in our country, and there is a great deal of difficulty in solving them because the tax issue involves a number of aspects, including the issue of qualification of the subject matter of the e-commerce operation, the issue of defining the e-commerce itself, the real name of the network, and the issue of effective recording of transaction information. The tax issue involves many aspects, including the qualification of the business subject of e-commerce, the definition of e-commerce itself, the real name of the network, the effective recording, preserving and confirming of the transaction information, the question of whether the consumers ask for invoices for the online consumption, the question of the effective monitoring of the transaction of the digital products, the issue of the tax management of the trans-regional and transnational e-commerce, and so on, which involves the macro-policy and legal environments, the management system, the network technological measures, and the awareness of the consumers. Therefore, I personally believe that it is difficult to solve the taxation problem of e-commerce completely in a short period of time, and it can only be improved gradually under the existing taxation system, on the one hand, to give those e-commerce that should be supported with appropriate preferential measures; on the other hand, to avoid the use of e-commerce tax evasion and the occurrence of double taxation. The complete solution of the e-commerce tax problem is pending the improvement of the overall policy and legal environment of e-commerce, and even the improvement of the global policy environment, which is not a short-term process.

According to a source from the State Administration of Taxation (SAT) who participated in the International Symposium on Western Development, China is exploring countermeasures on e-commerce taxation and plans to put forward a policy framework in the second half of the year. E-commerce tax countermeasures will be based on the current tax system to avoid greater fiscal risks, and will follow the principles of not imposing new taxes separately and keeping the tax system neutral to avoid unfair tax burdens and affecting the market's rational allocation of resources, the person said. China's e-commerce taxation, he said, is also prepared to combine tax policy with tax collection and management, and to base tax policy on the corresponding level of collection and management in order to safeguard national tax interests. In the formulation, there should also be considerable foresight. E-commerce is a new form of trade that has arisen in recent years along with the rapid development of modern information technology. It has very different characteristics from traditional transactions and poses new challenges to the tax system, policies and rules governing international taxation. At present, countries around the world are actively studying tax countermeasures for e-commerce. It is reported that the State Administration of Taxation has set up a research group on tax countermeasures for e-commerce, and the relevant specific tax policies are being studied, with a plan to put forward a tax policy framework in the second half of the year.

The United States is the earliest e-commerce development of the country, in 1999 online ordering sales have reached 55 billion dollars. E-commerce accounted for 0.6% of total private consumption that year. In China, as of the first quarter of 2000, there were more than 1,100 e-commerce sites of various consumer categories. According to the prediction of SEDI Consulting Network, the total transaction value of online shopping in China in 2000 will reach 350 million RMB. Since e-commerce is a brand new mode of operation, it is difficult to be taxed by the tax policy of traditional commerce. People have different opinions on whether e-commerce should be taxed. The author intends to elaborate from the economic and legal perspectives.

One, the economic analysis of e-commerce taxation

Currently, on the issue of e-commerce taxation, in the United States there are two very different views. Those who support tax exemptions for e-commerce believe that by exempting it from taxation, they can encourage the growth of this revolutionary way of trading. However, more than 150 U.S. tax economists oppose the continued tax exemption for online shopping. They argue that e-commerce should grow on its own competitive merits, not on special subsidies.

The author prefers the latter. Because in a free market economy, the market plays a leading role in resource allocation. Although the government is indispensable to the establishment and maintenance of the market, the policy factor should come second, and the extent of its role should be smaller than that of the market. The classical economics of the West has long argued that a perfectly competitive market is the optimal market, which maximizes the efficiency of both manufacturers and consumers, thus maximizing social wealth. Taxation, as a form of resource redistribution, should be implemented in such a way as to minimize the impact on the efficiency of a freely competitive market. However, if online commerce is exempted from the excise tax, then consumers use the Internet for shopping only because of the reduced expenditure on shopping relative to traditional retailing. Goolsbee, an economist at the University of Chicago, demonstrates that the rapid growth of Internet commerce has indeed benefited in large part from the tax exemption factor. The vast majority of the $55 billion in online sales in the United States in 1999 were tax-free. In addition, he found that e-tailing has grown more rapidly in states or regions that have high taxes on retail sales.

If online commerce continues to be exempt from the excise tax, traditional commerce practitioners will also demand that the tax burden placed on them be significantly reduced, if not eliminated. If their demands are met, it will have a negative impact on state revenues. Even if their demands are not met and online businesses continue to enjoy tax exemptions or reductions, the growth of online businesses, especially as a proportion of overall business, will lead to a reduction in revenue. Although many people have demanded tax exemptions and reductions for e-commerce from the perspective of vigorously supporting the new thing called e-commerce, the author believes that the use of policy factors to regulate the development of the industry may not be effective. Just as China's auto industry in the protection of high tariffs has always been a child who can not grow up, the e-commerce of this new industry to pour too much water, too much fertilizer, but rather make it lose in the market in the brutal environment of the ability to struggle for survival independently.

Two, e-commerce taxation of legal analysis

From the perspective of economic efficiency and equity, e-commerce taxation is very necessary. However, the specific implementation of the tax collection and management will find contradictions, the difficulty is quite large. Mainly include:

1. In the network, both parties to the transaction can be anonymous, the address is also uncertain. Therefore, the tax authorities neither know the real identity of the two parties to the transaction, nor do they know whether this falls within their jurisdiction. There is no way to monitor and audit the tax.

2. At present, most of the countries in the world adopt a tax collection and management system based on residence. With the development of electronic network technology, the mobility of people and things has been strengthened, and it is increasingly difficult to recognize the place of residence of residents. This makes tax avoidance easier and more common.

3. The vast majority of countries today have jurisdiction to collect taxes at the source of income. An important prerequisite for a country's effective exercise of territorial jurisdiction for tax purposes is the recognition of the source of income and the location of property. The location of a permanent establishment is one of the criteria for traditional business. A permanent establishment is a fixed place where an enterprise carries on all or part of its business. E-commerce, on the other hand, is connected through a network, and e-commerce merchants do not have ownership of the network lines or the users' electronic equipment, nor do they need to set up an establishment in the location of the users. Therefore, the standard by which e-commerce is taxed becomes a central issue. Whether the web server in e-commerce constitutes a basis for taxation has become the focus of discussion and has not yet been finalized. The form and content of e-commerce is changing rapidly, and even if there is a clear and unified understanding now, there is a risk that it will lose its significance because it cannot keep up with new developments.

4. The complexity of tax collection. Traditional retailers simply collect taxes at a single rate, fill out a tax payment document and pay it to a regional tax agency. In e-commerce, however, the retailer must pay and file various tax documents at different rates with thousands of different tax agencies. With the sale of electronic goods and the provision of services, the seller may not know where the customer receives the goods and services because they can be delivered over the Internet. This makes normal collection almost impossible.

5. High tax collection costs. Since e-commerce tax collection is very difficult, it would be very costly to achieve the level of traditional business tax collection.

In addition to the above problems, due to e-commerce legal norms are less, itself is still in the stage of imperfection, making the e-commerce tax collection and management more difficult. In addition, the global nature of e-commerce will inevitably cause the transfer of interests between countries, which involves the issue of international coordination. Such coordination is made more difficult by the extremely unbalanced development of e-commerce among countries. For example, the determination of the jurisdiction to receive, if the place of registration of the site as a criterion, in addition to the United States of America, the vast majority of countries will not agree; if the place of consumption of goods and services as a criterion, the United States has lost the right to tax the overseas network sales tax collection and management. This makes it difficult to form a "win-win" situation, and countries are less likely to reach an agreement.