UNCTAD comprises representatives of both private and government
agencies and aims to provide concrete information about a sector
which “has been subject to more far-fetched growth forecasts or
sweeping statements about a bright future” than any other and
highlights the importance of e-commerce for developing countries;
“by reducing costs, increasing efficiency, reducing time and
distances, e-commerce could become an important tool for
development.”
Its E-Commerce and Development Report 2001 reviews trends and
discusses the impact of e-commerce on the global economy and such
economic sectors as tourism and finance. The Report also warns of
the negative consequences should developing countries fall further
technologically behind the industrialised world and cautions
against allowing such a gulf to develop.
In order to avoid such technological borders, the Report calls
for “urgent intergovernmental co-operation” in terms of regulation
and taxation of the internet.
Income taxation largely depends on whether a business has
“permanent establishment” in a country or not. OECD countries have
agreed that a web site by itself cannot constitute permanent
establishment, while a web server can, if it is owned by a business
that carries on business through the server. However, "proposals by
OECD countries have given scant consideration to developing
countries' concerns in the field of e-commerce taxation", according
to the Report, which also notes the "major differences" between EU
and US approaches to international taxation rules on
e-commerce.
As to consumption taxes, such as VAT or sales tax, there is a
growing tendency to apply taxation in the place of consumption.
This would actually work in favour of developing countries, as most
of them rely heavily on such taxes for their government budgets and
will be net importers of e-commerce in the medium term.
Although no customs duties are currently imposed on electronic
transmissions, this is much discussed at the WTO, with a number of
countries advocating a tariff-free environment for e-commerce and
others expressing concern about possible revenue losses if products
previously subject to customs duties are imported duty-free.
Potential fiscal losses on border tariffs and other duties imposed
on digital imports could total $8 billion world-wide. While on
average this is less than 1% of total government revenue, tariff
losses would be much greater in developing countries.
