Subject: RE: OECD technical advisory group on e-commerce and professional data assessmen

From: [email-masked]
Date: Tue, 23 Mar 1999 11:16:40 +0100

This thread started with David Burdett noting that he had been invited to
participate in an OECD technical advisory group (TAG).

The OECD is explicitly bringing together business and government groups
together to find solutions to the taxation challenges presented by
electronic commerce in a manner that is mutually agreeable and creates the
least burden on the system. 

I'll be at the same meeting as David in April and some background on the
OECD and its position in relation to taxation and electronic commerce might
be helpful.

The OECD is not interested in new taxes for electronic commerce. Neutral tax
treatment between conventional and electronic commerce is the desired
outcome - a level playing field. Tilting the playing field in either
direction disadvantages part of an economy and benefits nobody in the long
run.

At a practical level, neutrality still means that taxpayers are responsible
for filling in their tax returns and having documents like receipts and
invoices to work from. The existing laws already apply to the electronic
commerce environment.

I imagine that people will chose to use IOTP for a number of reasons - the
convenience of matching buyer and seller payment systems in a single
interface, the generation of documentation for warranty claims etc. If the
protocol also helps people with their tax position, it just adds more value,
so its more attractive.

The OECD is not going to dictate what the IOTP must be or must include.
However it seems as thought IOTP already includes most of the elements that
people might need to work out their tax position at the end of the year. If,
on closer examination, tax experts find that IOTP does not contain a field
for some useful piece of tax information, they'll suggest it to the IOTP
people who can decide for themselves whether they want to include the field
or not.

So, what's in it for the tax people?

If tax people know that the systems underlying electronic commerce support
individuals (or companies, trusts, partnerships...) to get their tax
position correct, then there is less chance of innocent errors when people
are meeting their tax obligations. 

The existing laws already apply, but the practical mechanisms have not yet
caught up. When you buy something locally you know who you are dealing with
and both parties know what local taxes might apply. You also get some type
of receipt or invoice which you can use if you need to claim a tax deduction
etc. With mail order, even from a foreign country, it's similar. You get
documentation to help you answer tax questions and to provide comfort in the
form of warranties etc. You are able to make an informed decision about the
foreign country with which you are dealing, and whether you think it has
*reputable* businesses. You will also possibly have access to phone or fax
or e-mail contacts for queries or customer support.

One of the key things from the above example, is that commercial trust is
important. Commercial trust often revolves around identity - "who am I
dealing with".

I think that technologies like digital signatures might provide answers on
identity. I guess that IOTP will record some details of buyer and seller
(like an invoice in the real world), but that the validation of identity
will be done by reliance on some other system (according to the mutually
agreeable arrangement reached between buyer and seller). Whatever technology
is used to answer the question of "who am I dealing with" in the commercial
sense, it might also answer the "who" questions for tax purposes, or
intellectual property, or contact law etc.

A number of useful OECD documents on the tax issues are available from: 

http://www.oecd.org/daf/fa/e_com/ottawa.htm 

ranging from the technical to the more concrete. The Taxation Discussion
Paper perhaps containing some of the most interesting things to consider.

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