The rapid development and characteristics of e-commerce challenge the concept and principle of taxation in several aspects.

(1) The traditional standard of permanent establishment is difficult to apply under the existing international tax system, and the source country generally takes the establishment of a "permanent establishment" as the standard for taxing operating profits. Traditionally, the establishment of a permanent establishment is judged on the basis of business premises, agents or activities. E-commerce challenges these three standards.

In the OECD Model Tax Treaty and the United Nations Model Tax Treaty, a permanent establishment refers to a fixed place where an enterprise conducts all or part of its business. As long as the residents of one Contracting State engage in business activities in the other and have fixed business premises, such as management premises, branches, offices, factories, workshops and workplaces, it constitutes the existence of a permanent establishment. This standard judgment is difficult to apply in e-commerce. If a country has servers within its jurisdiction, but has no actual business premises, does it also constitute a permanent establishment? As the largest technology exporter in the world, in order to safeguard the tax jurisdiction of its residents, the United States believes that servers do not constitute permanent institutions; However, technology importing countries such as Australia believe that it constitutes a permanent institution.

In traditional business activities, if a non-resident conducts business activities in a country through a dependent agent, and the dependent agent has the right to sign contracts in the name of the non-resident, it is considered that the non-resident has a permanent establishment in the country. In the e-commerce environment, does the Internet Service Provider (ISP) constitute a dependent agent? Countries are also controversial about this. Owens, director of the OECD Financial Affairs Committee, believes that if an ISP is outside a country and its activities are within the country, it should not be regarded as a permanent institution; If it is within a country, but the ISP's activities on behalf of customers are only part of its normal business, then the ISP will not become a permanent institution; Only when all or almost all ISP activities in a country represent non-residents, can a country regard an ISP as a permanent institution.

If a person has no right to sign contracts on behalf of a non-resident, but often provides the non-resident with the inventory of goods or commodities in a certain country, and often delivers the goods or commodities from the inventory on behalf of the non-resident, it is traditionally considered that the non-resident has a permanent establishment in a certain country. In e-commerce, does it constitute a permanent establishment to own, control and maintain servers (servers can store information and process orders) within a country? The United States and other technology importing countries have different opinions on this.

(B) the nature of e-commerce income is difficult to distinguish

The tax laws of most countries distinguish between selling tangible goods, providing services and using intangible assets, and make different tax provisions. However, in e-commerce, traders can turn commodities originally expressed in the form of tangible property into digital forms. For example, encyclopedias can only exist in the form of objects in traditional trade, and the production, sale and purchase of encyclopedias are regarded as the production, sale and purchase of products. Now, customers can browse or get encyclopedias at any time as long as they buy data copyright online. Should the government regard these data and information provided in digital form as providing services or selling products? How to determine the tax types and tax rates applicable to their income?

In addition, tax treaties and tax laws in different countries have different tax provisions for different types of income. For example, non-residents are entitled to tax in the source country only if they obtain business profits (that is, income from the sale of goods) through their permanent establishment in the source country. For royalties and labor remuneration obtained by non-residents in the source country, the source country can usually only levy withholding tax. However, at present, e-commerce makes the division of income items more vague, because goods, services, franchising and so on all exist in the form of digital information when transmitted on the network, and it is difficult for tax authorities to determine whether it is sales income, labor income or royalties. For example, software sales, software companies think that selling software, just like selling books in theory, is selling goods, which is a kind of commodity sales income. However, from the perspective of intellectual property law and copyright law, the sale of software has always been regarded as providing franchise rights. Countries have not yet reached an agreement on how to tax online sales and services. ?

Difficulties faced by tax jurisdiction

First of all, the development of e-commerce will inevitably weaken the tax jurisdiction of tax sources. When foreign enterprises use the Internet to conduct trade activities in a country, they often only need intelligent servers with pre-approved software to buy and sell digital products. It is difficult to classify and count the business behaviors of service providers, and it is also difficult to identify who is buying and selling goods. In addition, the emergence of the Internet makes services break through geographical restrictions, and service providers can be thousands of miles away. Therefore, the emergence of e-commerce has caused disputes about the judgment of income sources in various countries.

Secondly, the tax jurisdiction of residents (citizens) has also been seriously impacted. At present, management centers or control centers generally judge the identity of corporate residents in various countries. However, with the emergence of e-commerce, the integration of international trade and the wide application of various advanced technical means, the management control center of an enterprise may exist in any country. It will be difficult for tax authorities to levy income tax on enterprises according to the principle of personality, and the tax jurisdiction of residents seems to exist in name only.

In addition, e-commerce also leads to the conflict of tax jurisdiction. Most countries in the world have parallel tax source jurisdiction and resident (citizen) jurisdiction, and adhere to the principle of regional jurisdiction first. However, the development of e-commerce will inevitably weaken the tax jurisdiction of the source, such as providing repair services and telemedicine diagnosis services through cooperative websites, which will make countries controversial about the determination of income sources. The development of e-commerce has also promoted the improvement and integration of the internal functions of multinational corporations, making it easier for multinational corporations to manipulate transfer pricing to engage in international tax planning, and the opportunities for tax evasion by using international tax havens are increasing. For example, some international tax havens have set up websites on the Internet and announced that they will provide "tax protection" to users. As the birthplace of e-commerce, the United States clearly proposes to strengthen the tax jurisdiction of residents based on its own interests. Therefore, although regional tax jurisdiction will not be abandoned, its status has begun to waver. ?

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