Subject: Tax rules and authorities

From: David Burdett <[email-masked]>
Date: Wed, 7 Apr 1999 01:58:37 +0100

I'm under no illusion as to the wide variety of existing tax rules and
regulations. However, put simply, what they all seem to boil down to is:
*	where's the buyer
*	where's the seller
*	what's being sold

We haven't really talked about "what's being sold" much but this also causes
a whole set of problems to be solved since, for example:
*	a ladies handbag might be categorized in France as a luxury good if
it costs more than ~$150 or the equivalent in French Francs and result in a
higher tax rate than if it costs less. So a US merchant would have to know
which exchange rate to use to work out the tax to apply
*	in some countries, the tax rate to apply depends on the
categorization of the goods, for example, childrens clothes in the UK incur
no tax but clothes designed for adults do. So a Canadian merchant would have
to potentially categorize the clothes they sell depending on the UK or some
other foreign tax authorities categorization of those goods ... and each
country might have different rules ...

I am sure that we can keep on finding more and more examples of how hard it
is to work out the tax rules which apply which I don't think is particularly
useful, so I want to make a few points:
*	the OECD Department of Fiscal Affairs IS aware of the types of
problems such as the ones I've described above and the others that have been
discussed on this list
*	the problem is not new, there are existing customs and excise rules
that have to be used to calculate the tax to apply when importing goods
*	there are several "Technical Advisory Groups" which have been set up
as part of this OECD initiative to address just the types of problems that
have been discussed
*	we, the members of  the Trade WG are not in a position to set
taxation rules either locally, nationally or internationally.

BUT ...

*If*, the OECD work results in a workable rules and procedures for
calculating tax on net purchases, then:
*	there will be benefits for everyone, if there is an effective way of
recording the taxes that are calculated as a result of applying those rules
... whatever they might be
*	IOTP has the potential to be the vehicle for recording in a standard
way, the taxes applied

Let's see what the OECD tags produce.

David
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