The OECD and the EU
Ravaged by centuries of wars and decimated by WWI and II, the E.U. was created in 1957 for the express purpose of establishing a peaceful and unified European Union. The establishment of the OECD in 1967 was crucial to global harmonization with regard to international taxation. Furthermore, the OECD is internationally recognised as a forerunner in the issuing of commentary pertinent to eCommerce and the taxing implications of eCommerce.
Cross-Border Consumption Taxation of Digital Supplies
Consumption taxes such as value added tax (VAT) or goods and services tax (GST) are an important revenue source for several countries, not least within the European Union (EU) which has had a harmonized VAT since the end of the 1960s. The intention of consumption taxation is to tax expenditures made by persons for their private purposes, i.e. the tax burden is carried by the final consumer. In the middle of the 20th century, the Internet opened up the possibility for electronic commerce. Many problems arise when the rapid evolution of techniques related to ecommerce is mixed with the objective of consumption taxation, particularly in cross-border supplies to consumers. This study focuses on the cross-border consumption taxation on digital supplies in business to consumer e-commerce from an international coordination perspective. The study presented in this book covers a comparative study of EC VAT, Australian GST and Canadian GST concerning how digital supplies are taxed in business to consumer cross-border supplies. It particularly focuses on potential risks of double taxation and unintentional non-taxation and identifying the causes for such cases. In addition the possible remedies suggested by the Organization for Economic Co-operation and Development (OECD) for double taxation and unintentional non-taxation are discussed. The findings in the study are evaluated based on rationality, which refers to the consumption taxation upholding the principles that are part of the OECD, Ottawa Taxation Framework Conditions. The principles that are part of the Framework Conditions are; neutrality, efficiency, certainty and simplicity, effectiveness and fairness and flexibility. The evaluation shows that the principle parts of the evaluation model are difficult to reach at a unilateral level, further international coordination is therefore necessary. Further international coordination should mean that principles need to be agreed upon at three levels: a policy level (so that jurisdictions effectively agree upon where supplies should be taxed), a legislative level (so that the policies and principles are effectively transformed into legislation that can be applied by tax authorities and courts, and an interpretative level (so that tax authorities and courts do not alter the intended policies and principles through diverging methods of interpretation). Part II: Classification & Place of Supply Chapter 5: Classification of Digital Supplies 5.1. The problems concerning classification This chapter deals with the classification of digital supplies. The classification is evaluated by drawing up the framework for these supplies within EC VAT, Australian GST and Canadian GST. This chapter thereby correlates to the first research question of the aim for this study. Uncertainty in the classification of supplies causes difficulties for the supplying companies in B2C transactions. It is likely to increase the administrative burden for the companies and may also have economic effects for them, affecting the pricing and costs of the supplies since different rates apply depending on how the classification is made. It is thereby also the starting point for where the supplies are deemed to be made i.e. which state that has a right to tax the supply. The Ottawa Taxation Framework Conditions (the Framework Conditions) agreed upon by the Member States of the OECD, forms the base for the evaluation model as discussed in chapter 3. The Framework Conditions suggests that digital supplies should be taxed at the place of consumption. The different classifications for supplies are often found in rules that are decisive for where the supply is taxed – rules concerning the place of supply. Therefore arguments for why a supply is classified a certain way often depend on where these supplies are suitable to tax. This chapter deals primarily with the classification as such, whereas the following chapter, chapter 6 deals with the place of supply and the consequences these rules may have for digital supplies. From a state perspective it is a question of balancing the need for tax revenue from these supplies against administrative costs for enforcing applicable rules and potential risks for tax evasion. Which then are the different criteria you need to be aware of in order to foresee the VAT consequences for different digital supplies? Case law from the ECJ, the Australian courts and Canadian courts is analyzed to give guidance on how digital supplies are or might be treated. The cases that are brought up are chosen to highlight important aspects of the framework for digital supplies. They are also chosen in accordance with the stipulated prerequisites in section 2.4.2. These prerequisites cover four different issues where the first is whether the case illustrates differences or similarities between different classifications. Secondly, whether parallels can be drawn from the case to digital supplies, even if the case as such does not directly concern such supplies. Thirdly, if principles can be ascertained from the courts’ reasoning which also can assist in classifying digital supplies. Fourthly, whether it is possible to formulate criteria that certain types of supply need to fulfil to follow a particular classification, which also are valid for digital supplies. Where case law is rare regarding the issue particularly discussed, the point of view of the tax authorities is brought up showing the administrative practice. This is especially valid for 808. The first research question is: how are digital supplies classified for consumption tax purposes, see section 1.2. 809. See section 3.7.1. Australian and Canadian GST. Few cases deal specifically with the issues of classification of supplies covered in this study. The EC VAT rules will differ during a transitional period due to the acceptance of the VAT package and directive 2008/8/EC. Consequently the analysis in this chapter of EC VAT is carried out by following the structure of the rules valid until 2010 and the changes following directive 2008/8/EC are treated in connection to the types of supplies concerned. Most of the changes affect the rules concerning the place of supply, but not the classification issues as such. This chapter brings up the three different jurisdictions separately to give a better overview of the different types of supplies. The comparison between the jurisdictions is generally carried out consecutively throughout the chapter and particularly in the end of the chapter.
ANALYSIS OF SAUDI ARABIAN MARITIME TRANSPORTATION INDUSTRY
This paper analyses the past, present and future of the maritime transportation industry in the Kingdom of Saudi Arabia. Saudi Arabian seaborne trade and the shipping capacity are analysed for the past 15 years. Relationships between the declining Saudi shipping capacity and other economic measures are identified. Analysis of the Saudi Arabian maritime transportation is performed with respect to the world carrier fleets and models are developed to determine the theoretical shipping capacity required for transportation of the national seaborne cargo. Forecasts of the future shipping capacity requirement for the Kingdom are also presented. This paper illustrates the general approach for analysing a country's maritime industry and thus could help other researchers in that respect.