Abstract:
Abstract: The Internet's current architecture allows international e-commerce
transactions of digitized goods to go untaxed by the country in which the income was
earned or the product consumed. The inability of these countries to tax such transactions
will erode their tax bases as e-commerce in digitized products grows relative to other
commercial forms. To forestall the erosion of its tax base, Singapore's revenue authority
boldly extends its existing consumption and income tax policies to e-commerce.
Singapore's proposed e-commerce tax regime is a model from which other countriesboth
those with similar tax regimes, such as the E.U. member economies, and those that
trade with them, like the United States-may learn. While Singapore's e-commerce tax
policy provides guidance and strives to promote internationally accepted tax principles, it
also raises concerns of exposing e-vendors of digitized products to double-taxation,
overly burdensome compliance costs, and unequal tax treatment, both between small- to
medium-sized e-vendors and their larger competitors, and between e-vendors and brickand-
mortar entities. The Singapore government should clarify that domestic
consumption of digitized products purchased from foreign e-vendors will be taxed;
conclude a bilateral tax treaty with the United States government to alleviate doubletaxation
concerns; adopt a standard to clarify which transactions will give rise to ordinary
income and which to royalty income; monitor the economic consequences of the
consumption tax registration threshold, the policy to base consumption tax jurisdiction on
where the customer purports to reside or on the customer's domain name or IP address,
and the requirements on e-vendors to obtain residency declarations from its customers
and collect and remit the consumption tax; and share its e-commerce tax ideas and
experiences with the international community, in particular the OECD member states, to
negotiate e-commerce tax protocols that strengthen its e-commerce tax regime.
