Ecommerce has great impact on current tax principle in several aspects:
First, tax levy has territorial management principle, which has been affected by ecommerce. Online trade business made tax payers movable and tax payers only need one computer, a modem and a telephone to change the business locations easily. Tax payer could move from one country to another country. So ecommerce has affected the tax territorial management principle.
Second, tax levy requires certificates, such as vouchers, account books and sheets verification. Ecommerce certificates are digitalized and all the information is processed on the computer so the information can be changed easily, leaving no trace. Tax bureau cannot get real information the first time which is an obstacle in ecommerce tax levy.
Third there are some taxation blind areas now. It is not easy to apply current value added tax principle on online trade business transactions. It is very hard to identify intangible assets transferring or labor service on online trade.
Fourth, fair principle is affected. There are more ways for ecommerce conductors to avoid tax, since they could click the mouse and change the address into low tax principle areas or tax haven areas so the profit can be saved more and more.
Some experts estimated that up to 2002, China e-commerce business revenue has reached ￥10 billion, which is a good opportunity and a severe challenge for china tax industry development.
On one hand, ecommerce has been a catalytic agent for economic development and it is sure that China business development is driven greatly and tax is also increased largely as a consequence.
On the other hand, current tax levy principle is based on real shop or store transactions, which is not suitable for ecommerce development so there are many problems for tax levy on ecommerce.
Ecommerce is movable and ecommerce could be easily hidden so there must be one unique code for ecommerce tax payer, which is within national standards.
Tax payers need to submit information, including websites, website ip, goods posted on the websites, and transaction payment tools, online bank account for registration in tax bureau.
Tax levy range should be expanded and goods products transactions and labor services business should also be covered.
Now three payment tools are popular, customers account payment, credit card payment, e-currency payment.
So tax levy may be processed on online banking payment settlement. If there is transaction payment, consumers' residential local bank takes charge of deduct value added tax and pay tax to the local tax bureau.
It can assure that tax can be collected on time and it can prevent tax evasion.
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