Tax administrators are concerned that e-commerce will impede their ability to collect taxes and fund public services, while industry wants to protect the Internet from discriminatory or burdensome tax obligations that would stifle the Internet s growth.
Internet taxation raises several issues that require international consensus.
For example, authorities must reach agreement on which taxing jurisdiction can collect taxes on specific network-enabled transactions or the resulting income stream. Because of the global nature of the Internet, a single transaction can potentially involve several jurisdictions, and double taxation can occur if more than lay claim to the tax. Governments must also reach consensus on how to classify income earned from electronic commerce, particularly when products such as musical recordings, photos or computer software can be digitized and delivered online. The ultimate goal is to coordinate tax policy globally and create a neutral, simple and easily administered tax system. Taxes imposed on online sales of goods and services should not create a unique or higher tax burden on online vendors or their customers.