However, if the customer is not a taxable person, there could be significant practical problems in collecting the tax. The place of supply of goods or services supplied over the internet may be different from the place of supply of the same goods or services by traditional means. Such a change would bring certain supplies within the charge to VAT where the purchaser is in the UK, but is not a taxable person. It will be appreciated that many countries outside the EU do not have a VAT or similar indirect tax. The issues discussed in this section are concerned with avoidance and evasion, and the techniques used to counteract it.
Similar problems arise in relation to cash businesses.
At present, electronic transactions are likely to be paid for by credit card, so documentation of the transactions will exist. However, if e-cash becomes available, the transactions will be essentially the same as cash transactions. Such e-cash transactions will not be confined to domestic transactions, but may be international. The problem of identifying taxpayers is exacerbated by the fact that an internet address may not give direct information regarding the whereabouts of the person behind it. This is likely to mean that tax authorities will have to make greater use of the provisions of double taxation agreements which facilitate exchange of information between tax authorities of the countries covered by the agreements.