Research on E-commerce Taxation
Based on many international research results on tax-related issues of e-commerce, this paper divides e-commerce into three specific forms from the perspective of tax challenges: as a way to sell tangible products remotely; As a way to provide services remotely and sell digital products online. And focus on realistic transaction innovation & the impact of online sales of digital products on traditional turnover tax and income tax and its countermeasures. Combined with China's actual national conditions, this paper makes a preliminary discussion on the attitudes, ideas and measures that should be taken in the tax-related research of e-commerce in China.
Keywords: E-commerce turnover tax income tax challenge countermeasures for reference
Since the commercialization of 1992 Internet, online trade has developed unprecedentedly. Virtual stores, online advertisements and online banking all show a rapid growth trend. According to the data of International Data Corporation (IDC), the annual transaction volume of Internet e-commerce in 1000 billion dollars in 1997 (including 8.5 billion dollars in the United States and1/000 billion dollars in Europe), and the annual transaction volume of Internet e-commerce will surge to 220 billion dollars in 2006. The rapid development of e-commerce has also brought some new economic, legal and life problems. Among them, the impact of some new transaction characteristics of e-commerce on taxation has attracted great attention of many tax experts and government departments. On the basis of reasonably defining the concept of e-commerce, this paper divides its specific forms from the perspective of tax research, and further discusses the tax countermeasures of e-commerce in China by combining the latest achievements of international tax-related research on e-commerce and China's specific national conditions.
I. E-commerce and its specific forms
To study the relationship between e-commerce and taxation, we must first define the connotation of e-commerce. At present, the international definitions of e-commerce are not uniform, including OECD definition, American definition and European Union definition. But all definitions should include the following three parts: e-commerce first uses the Internet to advertise and sell tangible products; Secondly, the use of electronic media to provide services; The third is to convert information into digital mode and transmit digital products (P.Bourgeois and L.Blanchette, "Income_taxes.ca.com: Internet e-commerce and taxation-some thoughts1"(1997) Vol 45, ISS. 5 Canadian Tax Journal1.
From the perspective of the challenge to taxation, e-commerce should be divided into the following three forms:
1, e-commerce as a way to sell tangible products remotely. In other words, the Internet exists as a trading place for tangible products, and what is realized on the Internet is only to look up the catalogue and place orders, and the distribution of tangible products is still carried out through traditional transportation channels. Ordering through the internet is only a formal difference from traditional telephone or fax ordering, and this transaction form has extremely limited impact on tax revenue.
2. E-commerce is a way to provide services remotely. That is, using electronic media to provide services from distant places, including providing information services through telephone, fax and Internet technologies. From the perspective of taxation, the difference between various media is not important, but only the difference of information transmission technology.
3. Selling digital products through e-commerce. That is, convert charts (static and video), words or sounds into digital form, transmit digital versions of the same information or sell pure digital products (such as computer programs). Customers who buy digital products use their own devices (computers, MP3 players, etc.). ) to reconstruct these files, pictures, videos, words or music, and then directly have pure digital information. Because all the transaction processes of this form of e-commerce (ordering, payment and delivery) are carried out on the Internet, which is divorced from the traditional logistics distribution system, this form of e-commerce is a real transaction innovation and poses a certain challenge to traditional taxation.
Second, the impact of e-commerce on tax revenue
Combined with the three forms of e-commerce, from the perspective of specific taxes, the impact of e-commerce on taxation can be mainly divided into the impact of e-commerce on turnover tax and the impact of e-commerce on income tax.
(A) the impact of e-commerce on turnover tax
From the three specific forms of e-commerce, in the first two forms, e-commerce only exists as an innovative way of trading media. As a trading place of tangible goods and services, the tax treatment measures of Internet are basically the same as those of other commodity trading places (telephone and fax). What really causes problems is the electronic commerce of transmitting digital products by electronic means, that is, the so-called tax problems caused by online traction.
In the case of turnover tax, online sales of digital products mainly cause two problems: how to distinguish domestic sales from export sales; How to levy taxes on imported digital products?
1, how to distinguish between domestic sales and export sales? Many turnover taxes (such as value-added tax and consumption tax) impose zero tax rate (or tax exemption) on exports. As far as tangible goods are concerned, it is easy to determine whether the goods are sold in China or exported through the delivery place or mailing address. However, it is impossible to know whether the online subscribers in online transactions are domestic or foreign. Any user of an Internet service provider (ISP) can have a stateless address. Technically speaking, it is impossible for online sellers to determine whether a sale is for export or domestic sale through the destination address, so it is impossible to determine whether a sale of digital products is tax-free or bears tax burden.
2. How to tax imported digital products? If digital products are imported in a tangible way (such as CD, floppy disk or CD), import tax and domestic turnover tax are usually levied. However, if these products are ordered and downloaded online, they can avoid inspection by customs and post offices that levy import taxes. In the past, technology limited the development of this part of the transaction-the high cost of the network and the time to download files. However, with the development of compression technology, the reduction of internet access fees and the acceleration of internet speed, the defects of this transmission medium have been greatly reduced, and e-commerce in this field may develop rapidly, which also leads to the corresponding tax loss. But at present, its impact on tax revenue is still small. It is estimated that the loss of sales tax on online sales in the United States, even in the most extreme case, is less than 2% of the total sales tax in 2000. It is estimated that the potential loss in 2003 is between 1-5% of the total sales tax (Merce growth challenge: the loss of income cannot be counted (June 30, 2000)).
(B) the impact of e-commerce on income tax
The influence of e-commerce on income tax mainly focuses on three aspects-the definition of the nature of e-commerce transaction income; The determination of the revenue source of e-commerce transactions and whether the permanent establishment is applicable to electronic addresses and servers.
1, the definition of the nature of e-commerce transactions. Under the traditional transaction mode, the taxpayer's purchase of goods is generally defined as sales income, and turnover tax is applicable. However, in the e-commerce environment, a large part of the value of products purchased by taxpayers lies in updating the original software by constantly downloading patches from the Internet. So is the initial purchase of products by consumers defined as sales revenue or purchase of franchise rights? Different tax treatment measures are different due to different definition standards. The former should be applied to general turnover tax, while the latter should be applied to royalties.
2. Definition of revenue sources of e-commerce transactions. According to international tax practice, a country's tax jurisdiction over income (that is, the right to tax income) usually depends on the source of income. Residents pay taxes on all sources of income, while non-residents only pay taxes on income from their jurisdiction. Due to the multifaceted nature of e-commerce transactions, the whole business process can be completed by decomposing into several sub-blocks, so there is no fixed standard to follow when judging the income source of a transaction. When determining the income source of a certain sales income, we can consider the place where the product is produced, the place where the contract is signed and the place where the product is sold. Usually, these places are closely related, but the dispersion of these places in the e-commerce environment has brought great pressure to the income source rules.
3. Does the concept of permanent establishment apply to e-mail address and server address in e-commerce environment? The concept of permanent establishment is an important concept in international taxation, which is mainly put forward to determine the taxation right of a contracting state to the profits of enterprises or branches of another contracting state. Both the OECD Model Convention and the United Nations Model Convention define a permanent establishment as a fixed place of business where an enterprise carries out all or part of its business activities. In the e-commerce environment, the flexibility of the Internet makes the concept of permanent establishment powerless. If the websites and servers established by enterprises in the countries where customers are located are defined as permanent institutions, enterprises can avoid taxes normally by transferring the servers or websites to tax havens or Internet service providers (ISP) in tax havens.
Third, tax countermeasures to meet the challenges of e-commerce
In view of the influence of the transaction form of e-commerce on turnover tax and income tax, the specific tax countermeasures for e-commerce taxation in various countries around the world mainly include the following aspects:
1. The distinction between domestic sales and export sales of turnover tax can be determined by the billing address. As a way to confirm credit card payment to online users, customers are usually asked to provide the billing address of the credit card. In this way, companies that sell digital products online can use this address to determine whether the sales are domestic or export.
2. On the taxation of imported digital products, the scheme adopted by the European Union is worth learning, that is, one country unilaterally applies domestic registration and payment rules to foreign suppliers, and taxes foreign suppliers equally with domestic suppliers. In June 2000, despite the strong opposition of the United States, the European Union imposed value-added tax on non-European suppliers who provided digital products to European customers, requiring suppliers whose annual sales to European customers exceeded 65,438+000,000 euros to register in EU countries and pay value-added tax to the EU (/pdf/2000/en500pc0349-02.pdf).
3. As for the definition of the nature of e-commerce transaction income, it is better for some international organizations to define the nature of transaction on the basis of reasonable classification because it involves the adjustment of tax interests between countries. At present, a technical advisory group of OECD is carrying out this work and hopes to submit a report by the end of 2000. In March 2000, the group submitted a draft, which divided e-commerce income into 26 categories. pdf)。 After receiving comments on the draft, the revised draft was published on September 1, which increased the list of income categories to 27 (/paris99.htm).
Fourthly, the reference significance of international e-commerce research trends to China.
E-commerce, as an innovation of trading medium, has indeed brought great challenges to traditional taxation. However, after comparing three trading forms of e-commerce, it is found that the impact of e-commerce on taxation is not as terrible as expected. Many domestic papers on e-commerce taxation take the influence of e-commerce on taxation as the root, which lies in the failure to properly classify the specific forms of e-commerce. In this paper, the third transaction form of e-commerce covers all transaction forms, which is suspected of "generalizing". Therefore, when determining the tax policy of e-commerce, we must be moderate. Combined with the current tax system characteristics and national conditions of our country, tax design, which is divorced from the actual national conditions, will eventually fail.
1. The tax problems brought by the first two forms of e-commerce transactions still apply to the traditional tax system. Because these two transaction forms need the cooperation of traditional logistics distribution system to be successfully realized, the current tax collection and management level of tax authorities should be able to achieve effective collection and management. Otherwise, before the emergence of network technology, the innovation of telephone and fax as transaction media should also cause corresponding tax problems. After the emergence of e-commerce, its tax issue has caused many disputes. The reason is that the third transaction form of e-commerce realizes transactions that cannot be completed by telephone or fax. The emergence of network technology is not only as an information tool, but also as a virtual space and trading place.
At present, the third transaction form of e-commerce should be completely tax-free. According to relevant statistics, the online consumption in China in 1999 was only 55 million yuan, accounting for 0.0 18‰ of the total social retail sales. In the same period, the number of online shopping households in the United States was170,000, and the online consumption reached $20.2 billion. Based on this calculation, the development level of e-commerce in China is only 0.23% of that in the United States (Li Xiaodong: E-commerce-related policies: E-commerce is the field with the greatest potential and full of business opportunities in 2 1 century. Excessive tax burden will inevitably inhibit the development of e-commerce of enterprises in China, and make enterprises in China lose the opportunities in the world competition.
3. Closely follow the international research trends of e-commerce taxation, and put forward some tax treatment schemes in combination with China's national conditions. With the continuous advancement of economic globalization, tax coordination between countries is also very important. At present, most of the members of the OECD Financial Affairs Committee who draft e-commerce tax policies and modify some concepts in the model are from developed countries (mainly from Australia and the United States), which is bound to stand in the position of developed countries-net exporters of e-commerce (software products), which is not conducive to protecting the interests of developing countries-net importers of e-commerce. In this way, as a developing country, China must also pay close attention to the international research trends of e-commerce and study our tax countermeasures.
References:
E-commerce and taxation: an overview of current issues.