Academic journal article Journal of Accountancy

Taxation and Electronic Commerce

Academic journal article Journal of Accountancy

Taxation and Electronic Commerce

Article excerpt

The Treasury Department has taken an important early step in examining how the explosive growth in communications technology and electronic commerce, including the Internet, may affect U.S. and international tax policy. Its November 1996 paper, Selected Tax Policy Implications of Global Electronic Commerce, said new taxes should not be imposed on electronic commerce; rather, existing concepts and administrative systems should be adapted to new ways of doing business, while ensuring that tax systems treat similar income equally, regardless of whether it is earned through electronic means or through more traditional channels. Even so, the Treasury projected that transactions in cyberspace will accelerate the current trend toward residence-based taxation and away from traditional source-based taxation.

The paper examined substantive tax policy issues, such as how one determines whether a business is subject to a country's tax jurisdiction. Such nexus issues concern both U.S. tax jurisdiction and the tax treaty concept of "permanent establishment." In addition, the paper addressed compliance concerns, in particular those associated with electronic money, identity verification, record keeping and information reporting.

The paper is available via the Internet at http://www. …

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