• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
  13. 13
  14. 14
  15. 15
  16. 16
  17. 17
  18. 18
  19. 19

Critically assess the impact of the Internet and E-commerce on Tax Regimes in the Commonweath Caribbean.

Extracts from this document...


Critically assess the impact of the Internet and E-commerce on Tax Regimes in the Commonweath Caribbean. Introduction Most, if not all, of the member states of the Commonwealth Caribbean derive their right to tax from their Constitutions.1 Section 48(1) of the Jamaican Constitution, for example, provides that '...Parliament may make laws for the peace, order and good government of Jamaica.' The Courts have continuously interpreted this right as one that is not unbridled and therefore, the governments of the region have to take every step to ensure that enactments do not contravene the provision of the Constitution.2 The stance of the Court was aptly put by Jackson JA in Inland Revenue Commisioners v. Lilleyman3 "...the courts need to be watchful for the constitutional rights of the citizens and against any stealthy encroachments thereon..." The power to tax, therefore, rests upon necessity and is inherent in any sovereign legislature under its general legislative power.4 The necessity being to provide the government with revenue necessary to meet its expenditure, thus satisfying the social, political and economic needs of its people. An erosion of the region's tax base will therefore be an issue of major concern. Globalization has impacted upon the region and as a result there has been a concerted thrust by most of the member states, to come together to attain a sustainable competitive advantage in the international marketplace.5 Perhaps the aspect of globalization that has impacted most on the region is the Internet and E-commerce. The United States Internet Tax Freedom Act defines electronic commerce as meaning: "any transaction conducted over the Internet or through internet access, comprising the sale, lease, licence, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provisions of internet access."6 Given the lack of geographical and national boundaries in transactions conducted over the Internet through E-commerce activities, the problem of applying the appropriate taxes to these transactions arise. ...read more.


Lord Viscount L.C in Swedish Central Railway Co v. Thompson stated "...when the central management and control of a company abides in a particular place, the company is held for purposes of income tax to have a residence in that place ...". There has been some disagreement, as brought out in Todd v. Egyptian Delta Land and Investment and De Beers Consolidated Mines Limited v. Howe, on the strict applicability of the rule that registration determines residency. In the latter case, it was decided that a foreign corporation registered abroad may reside in the United Kingdom, and so is subject to income tax. According to Lord Loreburn it was " clearly established that the majority of the Directors and Life Governors lived in England, that the Directors' meeting in London are the meetings where the real control is always exercised in practically all the important, business of the company..."23 Notwithstanding this disagreement, this test, which is based on UK common law principles, has been adopted by many of the territories of the Commonwealth Caribbean. As technology allows information to be transferred easily electronically, it is likely that the company residency test using "centre of management" or "control of the company" maybe more difficult to apply under e-commerce. Decisions can readily be made during video-conferencing or e-mail with management and/or directors located in different countries. Section 25 in the Barbados Act, for example provides for telephone meetings. Similar to assessing domicile of persons, the traditional concept of taxation based upon the physical presence for corporations is quickly being surpassed by technological developments in commerce. It has been argued, however, that this test was developed in an era when telecommunication and transportation was significantly less well developed than today. But with the rapid growth of the Internet there is no requirement to establish branches or agencies within a jurisdiction. This directly challenges the application of tax concepts such as residence based upon the existence of a branch or agency.24 Additionally, tax administrators cannot currently check the identity of e-commerce traders operating through computers systems. ...read more.


Also consideration should be given to the construction of one Electronic Transactions Bill for the Region, instead of the current piecemeal implementation process. This would no doubt further the effectiveness of the Caribbean Single Market and Economy (CSME), towards sustainable and viable economic development and one of the objectives of the Revised Treaty Of Chaguaramas, that is, the harmonization of internal tax regimes. Consideration could also be given to the four e-commerce taxation models proposed by the Advisory Commission on Internet Commerce in the United States, namely: (i) A use tax: this tax would bypass the inability to collect an interstate sales tax for e-commerce transactions that cross-geographical borders. This would be imposed on citizens that choose to shop online. (ii) Third Party Collection-Establishment of several "Trusted Third Party" clearinghouses. (iii) National Sales Tax: (iv) A proxy tax - Instead of introducing a sales tax, the telecommunications community would pay a tax. However, the necessary legislation and technological infrastructure would have to be in place to make any of these models effective. Conclusion Traditional concepts of taxation based upon physical presence and source of profits within a jurisdiction are quickly being surpassed by technological developments in commerce. E-commerce activities have been increasing over the years, and whilst it has provided economic opportunities for countries, governments for the most part, have been unable to collect taxes on these transactions because of the invisibility of the activities and lack of audit trail. Effective international co-operation will avoid the risk of individual countries taking unilateral action, which could create double taxation and/or excessive compliance burdens, which would damage international business in general.40 The overriding aim should be that the right amount of tax is paid at the right time and in the right country.41 In the face of all of this it is important that tax revenues in the Commonwealth Caribbean remain secure, so that public services can be adequately funded.42 Immediate implementation of effective legislation is therefore the call, so as to protect these tax bases. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. A study of Patent system in India in the light of Patent Cooperation Treaty.

    The decision to grant patents in the national phase is taken exclusively by national or regional offices. Only inventions can be protected by the PCT by applying for patents, utility models and similar titles. Design and trademark protection cannot be obtained via the PCT.

  2. Free essay

    Adam Smith "invisible hands"

    However, alteration in the conditions of demand and supply will shift the curves, which cause changes in equilibrium price and quantity in the market economy. The idea could further illustrate in Figure 5 and 6 below, which modified by Gillespie (Gillespie, 2007, p75-76).

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    transparent and negative rules for market access, based on MFN and National Treatment, which give reasonably clear direction to dispute settlement. One of the dangers of intrusive and complicated TRIPS-type regulation is that it opens new vistas for judicial activism powered by rich WTO members able to afford armies of high-fee lawyers.

  2. Flower Industry in Netherlands

    * Cooperation organization Based on the fact that Netherlands cannot gain competitive advantage by her population, her people, especially the relatively few farmers, tend to cooperate with each other. The cooperatives are important for farmers to exchange information, make loans, and reconcile supply.

  1. This investigation will try to test the level of external debt and measure its ...

    The general content of this essay is summarized in the following aspects: Chapter I will contain the necessary theoretical framework, which will sustain the explanation of Ecuador's economy in a practical order that will later be presented. In chapter II, the empirical framework will be undertaken, specifically a critical study


    the automatic classification of spam as 'Junk' and spam filters). This means that even though much spam is not even read, energy usage is still monumentally high. What can be inferred from this, then, is that other components of the Internet which are actively sought will have a significantly larger carbon footprint.

  1. Can there be certainty?

    By 1984, it became a public limited company. Up to the year 2000, The Body Shop has aided in campaigns that involved saving whales, helping Romanian orphans and funding healthcare projects. The Body Shop wants to get larger and increase sales and profits. The Body Shop sells a variety of goods.

  2. This article review is done for the course of Trends in Global Marketing Strategies. ...

    According to Porter, two elements, domestic rivalry and geographic concentration have especially great power to transform the diamond into a system - domestic rivalry because it promotes improvement in all the other determinants and geographic concentration, because it increases and enlarges the interaction of the four separate influences.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work