Guest Post - Global Taxation of Cross Border E-commerce Income

The following guest post is from Professor Rifat Azam at Radzyner School of Law. It is based on his recent article published in the Virginia Tax Review (Spring 2012). He explores a new tax regime focused on the global economy. I think it is an interesting suggestion, particularly the focus on the need to look at things differently in our increasingly interconnected world and environment. What about a global source of revenues to address global problems such as climate change and helping more people to have access to adequate living conditions, including access to technology?  Professor Azam encourages readers to approach the idea with an open mind.  I agree. Bold ideas can hopefully get us thinking beyond the status quo and consider whether new approaches are needed for our new ways of living and doing business.

Below is his abstract with links to the full article.

Global Taxation of Cross Border E-commerce Income

by Rifat Azam

Amazon.com sells tangibles, intangibles and services worldwide that totaled $34 Billion USD in 2010. At eBay.com more than 97 million active users globally meet to sell and buy online in total amount of $62 Billion USD in 2010. Global clicks at Google.com contributed substantially to its $10.5 Billion USD revenues in Q4 2011. Global e-commerce turnover is expected to grow up to $963 Billion USD in 2013.

This article examines the taxation challenges of e-commerce and discusses the current responses at the academic level, national level and international level. This discussion concludes that the right answer to the challenges was not given so far and the need for a different response is essential in the age of e-commerce.

The article argues for the imposition of a global e-commerce tax on cross border e-commerce income and designs the details of the tax. Institutionally, this tax shall be levied and administered by a supra-national institution called the Global Tax Fund and the article sets a framework of the design of this new institution to be established by the countries in new international tax treaty. The proposal adds that the global e-commerce tax revenues shall be spent on funding global public goods, such as climate stability, and global communication infrastructures and so on.

A substantial normative work is done in the article to convince that the proposed tax is a good tax from tax policy point of view. The article makes the arguments that the global e-commerce tax to fund global public goods is legitimate, certain, efficient, fair and contributes to the finance of a genuine global need, ultimately concluding that the global e-commerce tax would be a desirable and plausible resolution of linked problems on both the income and the expenditure side of government functions.

Furthermore, the article responds to expected objections to the article's novel idea. It argues that supra-national taxation does not infringe tax theory. To the contrary, it goes hand by hand with the theory in the global era. As to state sovereignty objections, the article argues that sovereignty has changed and supranational regimes serve the new sovereignty.

 What do you think?