By Arlene Martin
An 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."