By Arlene MartinAn agreement reached earlier this week by the Organisation for
Economic Co-operation and Development (OEDC) members has clarified
the taxable position of e-business.
The OECD issued the set of rules to help companies and tax
authorities determine how to apply national taxation laws to
e-business, in particular to resolve whether an e-business is
liable to pay tax to a country from where a transaction was
generated.
A key rule established by the 30 members of the OECD now states
that businesses would not be made liable for taxation on online
transactions in the country from which their website was
accessed.
Graham Fisher, an analyst with Bloor Research said, "The OECD
announcement clarifies the taxable position of e-businesses.
Businesses will now have to think carefully about their
location."
Tim Beadle, chairman of the Opus Group, said, "The clarification
provided by the OECD is a good thing. It makes it clear where the
tax burden lies."
But Jacques Sasseville, head of the Tax Treaty Unit of the OECD,
pointed out "This is just an interpretation of the existing tax
treaties. A more fundamental issue would be whether the existing
rules...should be changed in relation to e-commerce."