TaxPersonal TaxE-commerce outstripping tax system

E-commerce outstripping tax system

Changes in business practice to encompass e-commerce is outstripping developments in the tax system, according to a report from the Institute of Directors.

The IOD has been examining issues around the taxing of profits from e-commerce and has concluded governments are not keeping up with business and need to develop an international solution to cope with the changes.

Peter Allan, a senior IoD official, said: ‘The problems are international and they demand an international response. That means obtaining a consensus between many different countries.’There is a serious danger that changes in business practice will outstrip developments in the tax system. The world is running away from the authorities.’

Worry at the IoD echoes concerns expressed by tax experts on the European Commission’s failure to deal with collecting VAT on electronic goods sold to EU citizens from third party countries like the US.

Britain has asked for a VAT moratorium on all electronic goods, such as music, until a solution to collecting the tax has been solved.

Allan, the chairman of the IoD in the North East, said physical location of a company has become less important enabling business profits to move offshore.

Richard Baron, deputy head of the IoD’s policy unit, said that bodies like the Organisation for Economic Co-operation and Development had to move quicker to find solutions to the many weighty problems surrounding the taxation of e-commerce.

Companies, especially multinationals, he said, will need to know what the rules will be.

‘The taxation of profits from e-commerce has not yet become a burning issue, because there have been few profits to tax.

‘But there soon will be profits, largely made by multinationals with complicated structures of branches and subsidiaries,’ he added.

Links

Belgium set to meet UK to solve VAT crisis

UK seeks e-bus VAT moratorium

Related Articles

Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

3w Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

2m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

4m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

5m Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

6m Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

7m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

9m Alia Shoaib, Reporter