Consumption Taxation in a Digital World: A Primer

Posted: 14 Jul 2005

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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Abstract

At present, destination-based taxation of goods is the international norm. It is technically difficult, however, to implement destination-based taxation of 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 in implementing a system of destination-based registration.

In this article, the author reviews the economic and administrative issues that arise in the taxation of electronic commerce; addresses how best to meet the criteria of a good tax system, such as efficiency, administrative simplicity, and a fair sharing of the tax base; and examines recent policy developments in the European Union, the United States, and Canada.

Keywords: Consumption taxes, electronic commerce, cross border, international taxation, internet

Suggested Citation

Ligthart, Jenny E., Consumption Taxation in a Digital World: A Primer. Canadian Tax Journal/Revue fiscale canadienne Canadian Tax Journal, Vol. 52, No. 4, p. 1076, 2004 . Available at SSRN: https://ssrn.com/abstract=753465

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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