Article by Arthur J. Cockfield
This Article begins by exploring the issues surrounding the taxation of electronic commerce (e-commerce) business profits. The United States Treasury Department and other national tax authorities are struggling to find mechanisms to collect the anticipated significant revenues derived from taxing e-commerce profits. Legal reform is likely required because the existing regime was set up to handle transfers of physical goods across borders. This Article discusses possible reform efforts to confront the challenges posed by cyberspace transactions that defy traditional conceptions of cross-border trade. The Treasury Department and most other national tax authorities insist on using traditional international tax principles. Since it is clear that any reform will require significant international cooperation, this Article proposes a framework for the taxation of e-commerce profits that incorporates traditional international tax principles. Under the proposals, the country where the e-commerce good or service is produced should be able to tax most related business profits. This Article also proposes that e-commerce importing nations should enjoy a part of the revenues derived from sales within their borders. The proposals hence represent a balanced compromise between the interests of countries that are either net exporters or net importers of e-commerce goods and services.
About the Author
Arthur J. Cockfield. Assistant Professor, Thomas Jefferson School of Law; J.S.D. 1998, J.S.M. 1996, Stanford University Law School; LL.B. 1993, Queen's University Law School; H.B.A. 1990, University of Western Ontario Business School.
Citation
74 Tul. L. Rev. 133 (1999)