International direct taxation of e‐commerce: Developing a new conceptual model from marketing principles.

International direct taxation of e‐commerce: Developing a new conceptual model from marketing... The OECD is currently grappling with the problem posed by the rapid growth of e‐commerce, which undermines existing international taxation principles of source residency and permanent establishment. Although the OECD is examining the problem, its solutions to date fall short of suggesting significant changes to the basis of international taxation. It is argued in this paper that the existing conceptual basis of international taxation is inadequate to cope with the challenges presented by e‐commerce, and that new conceptual approaches are needed urgently. In this paper, we set out the nature of the challenge which e‐commerce presents to taxing authorities in respect of direct taxation, and we examine the nature of the OECD responses to the problem. We suggest that the basis of a new conceptual approach may be found in the examination of marketing principles, and proceed to construct a model of web site based economic activity. Our model, and the principles upon which it is based, suggest that international taxation of e‐commerce should be based upon the concept of ‘substantial economic presence’, and that this concept should replace the notions of residence and establishment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Accounting Research Emerald Publishing

International direct taxation of e‐commerce: Developing a new conceptual model from marketing principles.

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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
0967-5426
DOI
10.1108/96754260080001023
Publisher site
See Article on Publisher Site

Abstract

The OECD is currently grappling with the problem posed by the rapid growth of e‐commerce, which undermines existing international taxation principles of source residency and permanent establishment. Although the OECD is examining the problem, its solutions to date fall short of suggesting significant changes to the basis of international taxation. It is argued in this paper that the existing conceptual basis of international taxation is inadequate to cope with the challenges presented by e‐commerce, and that new conceptual approaches are needed urgently. In this paper, we set out the nature of the challenge which e‐commerce presents to taxing authorities in respect of direct taxation, and we examine the nature of the OECD responses to the problem. We suggest that the basis of a new conceptual approach may be found in the examination of marketing principles, and proceed to construct a model of web site based economic activity. Our model, and the principles upon which it is based, suggest that international taxation of e‐commerce should be based upon the concept of ‘substantial economic presence’, and that this concept should replace the notions of residence and establishment.

Journal

Journal of Applied Accounting ResearchEmerald Publishing

Published: Dec 1, 2000

Keywords: E‐commerce; International taxation; New concepts

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