Consumption Taxation in a Digital World: A Primer

CentER Discussion Paper No. 2004-102

28 Pages Posted: 2 Dec 2004

See all articles by Jenny E. Ligthart

Jenny E. Ligthart

Tilburg University - CentER, Department of Economics; University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: September 2004

Abstract

The paper reviews the economic and administrative issues that arise in the taxation of electronic commerce; addresses how best to meet the criteria of an ideal tax system; and examines recent policy developments. It is argued that destination-based taxation - as is presently the norm for goods taxation - is technically more complex for digital products and intangible services sold over the Internet, reflecting the difficulty of determining the location of the buyer and seller. Most of the potential solutions to this problem require a great deal of administrative cooperation between national tax authorities. Case studies of several countries show that policy responses to electronic commerce have differed, with the European Union taking the lead on implementing a system of destination-based registration.

Keywords: Destination principle, international consumption taxation, electronic commerce, origin-based taxation, cross-border trade

JEL Classification: H20l, H73

Suggested Citation

Ligthart, Jenny E., Consumption Taxation in a Digital World: A Primer (September 2004). CentER Discussion Paper No. 2004-102. Available at SSRN: https://ssrn.com/abstract=625044 or http://dx.doi.org/10.2139/ssrn.625044

Jenny E. Ligthart (Contact Author)

Tilburg University - CentER, Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 8755 (Phone)
+31 13 466 4032 (Fax)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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