Subject: 3 December 1998 TRADE WG conference call minutes

From: "Donald E. Eastlake 3rd" <[email-masked]>
Date: Sat, 05 Dec 1998 19:04:32 -0500

Attendance: Donald Eastlake, David Burdett, Steve Fabes, Michael
Harvey, Chris Smith, Jason Flick, Doug Taylor

(1) Document status

	SCCD: Jonathan Sowler is expected to post a message to the list
	on when he will have a new version.
	
	XML SIG: On general XML SIG, Donald Eastlake is talking with
	Richard Brown and Hiroshi Maruyama about making this a separate
	effort covering general XML canonicalization, hashing, and
	digital signatures.
	
	IOTP v1.0 Protocol: Should be final soon.  Donald Eastlake needs
	to recommend text on signatures and use of IANA Registration
	Facilities.
	
	HTTP: Changes agreed in Tokyo will be reviewed in Orlando.

(2) draft-rfced-info-blinov-00.txt

	Chris Smith had some comments and agreed to write them up and
	post them to the list.  All we have been asked to do as a WG
	is see if there are any obvious problem with the document or
	conflicts with what we are doing.

(3) Version 2.0

	Several people expressed a feeling that there should be some
	"still waters" after v1.0 for implementation and
	interoperability testing of v2.0.  There was also continued
	agreement on the v2.0 document structure reviewed in Tokyo and
	already distributed on this list.  Some of the proposed pieces
	of the v2.0 documentation might be extremely close to v1.0
	because they cover parts that don't change much if at all. Would
	it be worth while publishing them as a v1.1 document or the like
	for ease of reference? There did not seem to be a clear
	consensus and this should be discussed on the list and/or in
	Orlando.

(4) HTML Form Field Names

	The question was raised of whether this WG should consider
	standardizing or compiling information on common HTML Form Field
	Names for use in Internet commerce.  These would be fields that
	might occur in forms during shopping and could include ship to
	address, name, etc.  This information can also be transferred in
	IOTP via an Authentication transaction. The possibility of an
	field name that indicated the server spoke IOTP was raised. 
	There are privacy implications as there are for Authenticate. 
	In general, the reaction was favorable.

(5) Taxes....

	Michael Harvey of the OECD was on the conference call but, as is
	the norm in IETF WG's, was representing himself, not making
	official statements on behalf of the OECD.  The following are
	some summary exerpts of what he said in response to questions by
	others on the call.
	
	The OECD is looking for the most efficient and unintrusive way
	it can to collect taxes on Internet commerce.  The have started
	a two year study/planning effort and are tracking protocol
	development.  But just popping out with "requirements" in two
	years and expecting them to suddenly be incorporated in
	protocols is not too likely to work.  So some interaction with
	protocol development efforts during that time would be good.
	
	Indirect taxes, such as income taxes, are not a problem until
	further into the future.  Consumption taxes such as value
	added and sales taxes are a more near term problem.
	
	To some extent it boils down to record keeping requirements and
	no system will be 100% effective.
	
	The tax authorities tend to think about things in terms of three
	populations of transactions, consumer to business, large
	business to large business, and other business to business.
	There is generally little problem with transactions between
	large businesses as they are used to dealing with international
	taxation and record keeping requirements.
	
	There doesn't seem to be any other protocol effort, besides IOTP,
	that has done any thinking about taxes except perhaps a little
	in the SET Consortium.
	
	At one point someone suggested that there may be web sites in
	the future that give tax avoidance advice.  The response was
	that there already are such sites.

Thanks,
Donald

=====================================================================
 Donald E. Eastlake 3rd   +1 978-287-4877    [email-masked]
 318 Acton Street         +1 978-371-7148(fax)
 Carlisle, MA 01741 USA
-----------------------------------------------------------------------
Message addressed to: [email-masked]
Archive available at: http://www.elistx.com/archives/ietf-trade/
To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
body to: [email-masked]

---

From: [email-masked]
Date: Mon, 7 Dec 1998 10:31:53 +0100

A few clarifications and additional comments on taxes ...

The OECD is basically an international economic forum of the governments of
29 leading countries. Taxation is one of the economic subjects discussed at
the OECD and the OECD is generally regarded as the leading international
organisation dealing with international taxation issues.

The OECD does not have a mandate to address sub-national tax issues.

Basically, electronic commerce activities are currently subject to tax
according to existing tax laws, but administration presents challenges. To
address the challenges several approaches have been discussed, outside of
the OECD, ranging from tax free electronic commerce to specialised taxes
like the bit tax. Both of these approaches are discriminatory and
distortionary and would adversely impact on business planning and investment
by favouring one type of commercial activity over another. Tax is not meant
to have this kind of impact on business. So the OECD approach is neutrality
- apply existing taxes in the least costly and intrusive way possible. 

The OECD has been looking at the taxation implications of Internet
electronic commerce for a few years and at a Ministerial conference in
Ottawa in October this year, Ministers endorsed the proposal that the OECD
should open its processes to include the private sector and non-member
governments in it's work on taxation and electronic commerce.

As a result the OECD is in the process of forming technical advisory groups
on various taxation issues whereby OECD members, non member governments and
the private sector can sit down in equal partnership and look at viable
solutions to some of the taxation issues. 

These groups should be constituted with a two year life in the first
instance.

One of the areas the OECD recognises that it must examine are the emergent
protocols and standards. The intention is that where a commercially
developed protocol / standard is developed to meet a commercial need
(customer authentication, contractual non-repudiation etc.) and that there
is a similar taxation need (e.g. taxpayer authentication) then tax
authorities, through the OECD, should discuss the common needs with the
developers of the protocol / standard. Boiled down, the key tax questions
are: who, where, when, what and how much. While the taxpayer is the primary
source of the answers, independent verification mechanisms (the audit trail
and record thereof) are often required. 

Based on preliminary examination of what IOTP is trying to achieve, there
seems to be some scope for overlap with what tax authorities need in order
to administer existing tax laws.

There are a number of different bodies looking at taxation or related issues
- the European Commission, the World Customs Organisation, APEC, regional
tax bodies etc. The OECD is attempting to create a single portal to bring
these different organisations, as well as individual countries, together
with the private sector in one consideration of the issues so that non
fragmented responses can be developed in a globally consistent fashion.
Hopefully this will also avoid individual groups being fatigued by multiple
meetings with different bodies all trying to cover similar issues.

From the OECD perspective, indirect taxes, like consumption taxes (VAT, GST,
...) are considered to be a more immediate concern as each current
transaction potentially generates a tax issue. Direct taxes like income tax
are less urgent in the sense that you need to make a profit to be subject to
income tax, but, if businesses are looking to claim current losses against
future profits then income tax issues become more current. 

Michael Hardy

> ----------
> From: 	Donald E. Eastlake 3rd[SMTP:[email-masked]]
> Sent: 	Sunday, 6 December 1998 1:04
> To: 	[email-masked]
> Subject: 	3 December 1998 TRADE WG conference call minutes
> 
>

---

From: Ross Kouhi <[email-masked]>
Date: Mon, 7 Dec 1998 11:22:44 -0500

> 	further into the future.  Consumption taxes such as value
		added and sales taxes are a more near term problem
> 	no system will be 100% effective.
Taxation being entertained in the protocol sounds like a bad direction.  Any
imposed taxation should be kept as the  responsibility (problem) of the
point of sale, as in conventional commerce.  Anything else is akin to having
a G-Man standing at each cash register removing some cash as you pay for
your chewing gum.  We don't do that, rather, the vendor is required to
tabulate his sales, and - with periodic audits - submits the required
percentage to the appropriate governments.  

Perhaps the appropriate involvment of the electronic systems is for end user
applications to  track the transactions and present the sales total to the
vendor for their use.  The onus then is upon the local governments and
vendors to handle taxes as they will.  That is,  the vendors of applications
(eg. the creators of WWW pages) can be left to write or buy end user
software that will total the sales as required.  

Taxation is generally intended to claim a fee on certain sales in an
geographic area to support programs and services that are 'enjoyed' by those
same consumers.  There is ongoing difficulty in governments to understand
that e-commerce will not necessarily, and in some cases rarely, involve
local people buying from local vendors.   How governments deal with that is
their problem, and responsibility.  

I have no doubt, though, that if they are offered a chance to build in
taxation into a system, they will take the opportunity.  Luckily, if the
OECD won't even have an opinion for 2 years, it sounds like it should be
possible to get a system deployed without imposed taxation at the wrong
place.  This will keep it between the vendor and the governement where it
belongs, rather than in the system that allows the transactions to happen. 

The comment above about record keeping is spot on.  Being new to this forum,
however, I am not certain if the end user's record keeping is something that
is relevant to the protocol discussion.  Are hooks contemplated for the
protocol that will ease the creation of those tools that do the record
keeping?

________________________________________________

                     Ross Kouhi
          Manager, Emerging Technologies
      AT00 Network Edge Technology (NET)
N O R T E L    N E T W O R K S
(613) 763-4586            (613) 763-2096
________________________________________________