After Faraday discovered the basic principle of electricity (electromagnetic induction in 1831), a sceptical politician asked him what it (electricity) was good for. Faraday responded with the following: "Sir, I do not know what it is good for. But of one thing I am quite certain, some day you will tax it." :-)

I think the real issue here is the question of what makes a particular form of good or service taxable, despite its nature...i.e tangible or un-tangible, or is it the mode of delivery?

If 60% of businesses went online...what would happen to our tax revenue? KRA?

the EU introduced a new law in 2003 requesting non-EU e-commerce companies to pay VAT if they sold goods within the European Union, including electronic transactions, while on the other hand the US have continued to push for a tax free internet.

http://www.opencongress.org/bill/110-h3678/show

This has greatly hindered business between these two continents(maybe its a power issue) but ,whether it should be destination or origin taxation...I think that
EAC should look at it critically..... what works best....for it and its business transactions globally....this is bound to have a grand economic bearing.....are we importing more or exporting more?

My question is, how tax free is tax free?

Whenever you buy stuff from e-bay and amazon,you will pay tax..and when the goods are delivered,likewise.....so where does the free come in?

My Contribution.....lets pay tax....what I havent made up my mind on...is whether it should be destination or origin.

Kind Regards,

On Wed, Aug 20, 2008 at 8:22 AM, mwende njiraini <mwende.njiraini@gmail.com> wrote:

Morning,

Today we continue our discussions on economic issues.

As the internet becomes critical to global trade, there is debate as to whether governments should expand their tax base to include internet transactions. Internationally there have been proposals for the introduction of e-taxation based on the "Ottawa principles" of destination and origin taxation. Under the destination principle supplies of goods and services are taxed in the jurisdiction in which the goods and services are consumed. This means that exports are zero-rated, while imports are taxed. On the other hand under the origin principle supplies are taxed according to their origin. This means that exports are taxed but imports are not taxed.

In your view what principle should be adopted in relation to e-commerce for developing countries? Should the internet be a tax-free zone or have special taxation treatment?

You are encouraged to contribute to previous discussion threads.

Reference:

1.      Internet Governance: Economic Issues Available at: http://textus.diplomacy.edu/textusbin/env/scripts/Pool/GetBin.asp?IDPool=629 [Accessed August 2008]

2.      Options for Taxing Imported Services. Available at: http://taxpolicy.ird.govt.nz/publications/files/html/gstimported/c4.html [Accessed August 2008]

Disclaimer: These comments are the author's own

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