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[Pakistan] e-commerce tax collection raises new issues
[from Comp-list mailing list]
Electronic tax collection raises new issues
The News, By our correspondent 1/14/2003
http://www.jang-group.com/thenews/jan2003-daily/14-01-
2003/business/b4.htm
KARACHI: Member Tax Reforms, Central Board of Revenue (CBR) M S Lal
said the collection of tax through e-commerce (electronic mode) is
practically impossible in Pakistan because the country has no
effective system for verifying electronic signatures so far.
He was addressing a seminar on "E-commerce and Its Taxation"
organised by Karachi Income Tax Bar Association (KITBA) here on
Monday. The information technology has solved many problems but it
has also complicated some.
"Instead of taking hasty steps to formulate new laws, it is necessary
to benefit from the experience of developed nations", he said.
He called for introducing new concepts and laws to meet emerging
issues of e-commerce. Pakistan has skilled people in E-commerce who
can work on direct taxes and income tax. Electronic Law 2002 needs
further improvement and amplification, he said.
Lal asked large taxpayers to submit a soft copy about fixation of
January 15, 2003 last date for submission of manual returns. External
consultants have been hired to evaluate 252 large taxpayer units, of
which three will work in Karachi, he informed.
The CBR is planning to organise a national conference on e-commerce
and its taxation. The Income Tax Ordinance 2001 is the most modern
model document in the region. When in drafting stage, the matter to
incorporate e-commerce laws in the ordinance also came under
consideration, but its promulgation was deferred since it was still
in infancy in Pakistan. The bar members should help the government in
formulating e-commerce laws and its taxation.
Standard Chartered Bank's Arif Siddiqui made an extensive
presentation on transaction processing in e-banking, banking network
in online commerce, electronic credit system and electronic cheque
system. He informed about the working of e-banking and deliberated on
the features, benefits and threats to e-commerce transactions.
Earlier, Syed Majid Ali, Director Tax, Taseer Hadi Khalid and Company
said e-commerce was beyond national boundaries. As it was a global
problem it needs global solutions.
He said e-commerce taxation is different from conventional taxation
principles but the conventional ones could guide through the e-
commerce implementation. The OECD Ottawa Conference had agreed in
principle that conventional principles of taxation with little
alignment could be used for e-commerce transactions worldwide.
He talked on the taxability of e-commerce trade and highlighted
important areas, sources of income, characterisation of income,
attribution of income and collection of tax.
President KITBA, Abdul Qadir Memon hailed reforms in the CBR being
introduced for past three years and urged the government and
professionals to consider the resolution of some very important
points, which the country would confront in the years to come.
He said the first point is how existing concept used in the
Organisation for Economic Corporation and Development's model
convention can be applied to e-commerce. Secondly, as part of the
monitoring process for the OECD Transfer Pricing Guidelines, we must
invite descriptions on situation that would raise new or difficult
transfer pricing issues for which the OECD model may be inadequate.
Memon observed we must evaluate threats and opportunities e-commerce
may have with regard to basic compliance and avoidance/evasion
issues. The lawmakers and professionals should start addressing these
issues otherwise Pakistan would lose a lot of tax on the global e-
commerce transactions.
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