--- begin forwarded text
From today's Australian Financial Review.
http://www.afr.com.au/content/970829/inform/inform1.html ATO urges no Internet slug _By Hans van Leeuwen_ The Australian Tax Office's attempt to tax electronic commerce should include no new taxes and as little extra red tape as possible, according to the recommendations of a major ATO report to be released today. The report, _Tax and the Internet_, urges close monitoring of some key industries with a growing Internet presence -- including computer software, news and information, recorded music, gambling, travel services and retail goods. But its emphasis is on creating a tax and regulatory environment that keeps the online industries in Australia, rather than driving them to more lenient tax jurisdictions. The report will be the basis for discussions with the information industry on how the ATO can prevent the undermining of the tax base by electronic commerce. The report said the ATO would need to tax and regulate the Internet only in concert with other countries if it was to encourage online businesses and industries in Australia. "As the Internet allows electronic payment system providers to locate their operations anywhere in the world, they might choose to flee a jurisdiction that unilaterally introduces a strong regulatory regime . . . Unilateral action may be more damaging than no action," the report said. But the tax base must be protected, with electronic commerce posing a significant threat in the longer term to the revenue base of many taxes. "There are not too many existing taxes worldwide that are not vulnerable," the Tax Commissioner, Mr Michael Carmody, said yesterday. The recommendations to strengthen the tax policing of the Internet included: * Numbers displayed on websites. * Licence commercial internet sites ("webshops") and webshop hosts. * Introduce denomination limits for electronic cash, like those already existing for physical cash. * Review the current wholesale sales tax categories, given that new products were being thrown up by the process of digitisation. But Mr Carmody ruled out introducing any taxes on data flows, such as a bit tax, in the short term. "We don't see major advantages to that at the moment. For Australia to jump immediately to a bit tax would just drive Australian business out of the country," he said. The report said electronic commerce threw up some tough challenges to tax administrations, including the difficulty in identifying the parties to an electronic transaction, the ability of cyber- businesses to store records offshore and encrypt them, and the removal of "middle men" -- such as wholesalers and brokers -- from the distribution process, who usually make the ATO's tracking of transactions easier. But Mr Carmody said the ATO would not be assuming that the reason businesses went online was to avoid tax. "It's just another medium of transacting business, which does not of itself say they're not going to meet their tax obligations," he said. "But there are concerns that the Internet opens up wider fields for those who are seeking to avoid their liabilities." _________________________________________________________________ [27]Back To Top _© This material is subject to copyright and any unauthorised use, copying or mirroring is prohibited._ --- end forwarded text ----------------- Robert Hettinga (rah@shipwright.com), Philodox e$, 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' The e$ Home Page: http://www.shipwright.com/