Electronic Commerce and Taxation

The use of traditional international taxation principles seems inadequate to tackle electronic commerce. This appears most clearly when the object of the economic transaction is the transmission of information. However, it seems possible to rescue the traditional concepts by reformulating them. The way of doing this is to define transactions with reference to their economic function and to the rights being transferred rather than to physical characteristics like “location” or “form of deliverance”. Two concepts in particular come mt0 discussion: “presence” and “type of transaction”. Possible solutions must take into account that location of contacts may have little relationship with the essential economic activity and that the classification of a transaction should depend upon the function of the rights being transferred rather than on its form.