NOTIFIED COST INFLATION INDEX UNDER SECTION 48, It even has its own social security number for tax purposes, called a Federal Tax ID. The following are the limits indicated therein: (i) Territorial Water -12 nautical miles from the nearest point of appropriate base line. At this point, the web based transactions with e-commerce caused the area of operations extensive as national and international. The issues such as tax loss and tax evasion are crucial in terms of countries. In some cases, the principal place of business is relevant in deciding the law applicable. Tax implications of e-commerce June 2000 This article was originally published in the September Taxation of E-Commerce issue of International Tax Review. Legal difficulty: Till now all cross-border commercial transactions have to cross the customs barrier or the postal barrier. This is relevant to determine whether income from sales can be taxed on host country soil. Given the potential tax revenue from this sector, governments around the world must give great attention to the taxation of e-commerce transactions, including the imposition of Value Added Tax. The anti-tax position addresses three issues: Regulation of Internet commerce by imposing state and local taxes will threaten the growth of e-commerce. On the other hand, if the income is classified as income from sales, then unless there is a permanent establishment, there can be no taxation in the host country. Section 9 provides that income is deemed to accrue or arise in Indian taxable territory if there is a business connection. Register to receive personalised research and resources by email, Taxation of Electronic Commerce: A Developing Problem, /doi/pdf/10.1080/13600860220136093?needAccess=true, International Review of Law, Computers & Technology. Imposing regulations on online retail might be excessively difficult right now, but as the percentage of sales transactions shift toward the virtual and away from the physical, governments will … ), Issues and Problems in taxing E-Commerce transactions – Income Tax. Others are traditional issues applied to the Internet, such as copyright, contracts, consumer protection, privacy, taxation, regulated industries and jurisdiction. The existing tax system is too complex and burdensome. How long does it take for Cheque/ DD payments to get updated in MCA21 system? 3099067 Reports suggest India is on its way to becoming the world’s fastest growing e-commerce … Appropriate insertions / amendments are required, about e-Commerce transactions with respect to determination of place of economic activity, in these models. Public Policy Issues in E commerce. It can in all probability be in a tax-haven country. With regard to tangible property, the source can be traced, as the delivery has to cross the other territory through the customs or postal barrier. (iv) Exclusive Economic Zone is an area beyond and adjacent to the territorial waters extending to 200 nautical miles from the base line. In a contract, generally the parties are free of choose the law applicable to the contract and the same can be expressed or implied in the terms of the contract. taxation of e-commerce that was published on 1 January 2013. They argue that it will drain vital revenue from state … The rapid growth of e-commerce, especially the sale of goods and services over the internet, has fuelled a debate about the taxation regimes to be used. Tax administrations throughout the world face the formidable task of protecting their revenue base without hindering either the development of new technologies or the involvement of the business community in the evolving and growing e-market place. 800. The real problem for enforcement in an E-Commerce situation arises in transactions involving online delivery and payment, which is growing at a fast pace. Additionally, in many states if your revenues exceed around $100,000 a year (or 200 transactions), you have sales tax nexus. Known as "economic nexus," this is a new law that just went into effect in June, 2018. The difficulty is not so much in taxing those who are assessed and who maintain accounts but in taxing others who do business and there is no record of their transactions, like the persons liable to pay the ‘use tax’ in US. They have to be understood in the light of international taxation. The volume, roughly $4 trillion, of e- (ii) Contiguous Zone – 24 nautical miles beyond and adjacent to the territorial waters from the base line. Even in the present situation, the tax authorities are unable to fully grapple with the problem of myriad ways of tax evasion. E-commerce taxation: direct tax issues The e-commerce industry in India has witnessed exponential growth in terms of volumes and revenue and is expected to grow to over USD 15 billion by the end of 2015. The name is self-explanatory, it is the meeting of buyers and sellers on the internet. Similarly, the Act prohibits states from discriminating against e-commerce transactions by imposing a tax on items sold over the Internet but not on similar items sold through more traditional means (such as catalog or telephone) or by taxing Internet … Given that assumption, there are three basic options. And if there is a permanent establishment, how much income is to be taxable will be determined by how much of the income is to be attributed to the permanent establishment. 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