Sales Tax on the Internet: When and How to Tax?
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uzuner_tax.pdf
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Author(s) •
McKnight, Lee
Uzuner, Ozlem
Date Issued
July 22, 2002
Abstract
As a first attempt to tax electronic commerce, many
countries applied the existing tax laws to Internet.
However, applying these laws to border-spanning
electronic commerce proved very inefficient and
inappropriate. While some authorities claim not taxing
the Internet is the best solution for encouraging the
growth of electronic commerce, we believe that use and
sales taxes in general are an important part of a
government?s revenues and that their ban over the
Internet is not feasible. Given the magnitude of potential
revenues to be obtained from sales over the Internet, we
need to consider when and how governments should tax
electronic commerce. We focus on some proposals which
try to answer this question and argue that a taxation
scheme based on the location of the consumer is the best
starting point for a global solution.
Subjects
Internet
sales tax
electronic commerce
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