Characteristics of cross-border e-commerce

Cross-border e-commerce is developed based on the Internet. Compared with physical space, cyberspace is a new space. It is a virtual but objective world composed of URLs and passwords. The unique value standards and behavior patterns of cyberspace profoundly affect cross-border e-commerce, making it different from traditional transaction methods and presenting its own characteristics.
Transnational e-commerce has the following characteristics (analysis based on cyberspace):
(1) Global (Global Forum)
The network is an intermediary without borders, with the characteristics of globalization and decentralization. Cross-border e-commerce, which is dependent on the Internet, therefore has the characteristics of globalization and decentralization. Compared with traditional trading methods, e-commerce has an important feature in that e-commerce is a borderless transaction, which has lost the geographical factors of traditional exchanges. Internet users can submit products, especially high value-added products and services, to the market without having to consider crossing national borders. The positive impact of the global nature of the network is the maximum sharing of information, while the negative impact is that users must face risks due to cultural, political, and legal differences. Anyone who has a certain technical means can let information enter the network at any time and anywhere, and communicate with each other for transactions. The U.S. Department of the Treasury pointed out in its fiscal report that it is difficult to tax e-commerce activities based on a globalized network, because e-commerce is based on a virtual computer space and loses the traditional transaction method. Geographical factors; manufacturers in e-commerce tend to conceal their residences and consumers are indifferent to the manufacturer’s residences. For example, a very small Irish online company can sell its products and services through the Internet through a web page that can be clicked and viewed by consumers all over the world, as long as the consumers are connected to the Internet. It is difficult to define in which country this transaction took place.
The development of such remote transactions has created many difficulties for the tax authorities. Taxation power can only be implemented strictly within a country. This characteristic of the Internet makes it difficult for tax authorities to exercise tax jurisdiction over online transactions that transcend a country. And the Internet sometimes acts as a proxy intermediary. In the traditional transaction mode, a tangible sales outlet is often required. For example, books are sold to readers through a bookstore, and online bookstores can replace the bookstore as a sales outlet to directly complete the entire transaction. The problem is that tax authorities often rely on these sales outlets to obtain the basic information needed for taxation, withholding and paying income tax, etc. Without the existence of these sales outlets, the exercise of tax power would also be difficult.
(2) Intangible
The development of the network makes the transmission of digital products and services flourish. The digital transmission is carried out through the concentration of different types of media, such as data, sound, and images in a globalized network environment. These media appear in the form of computer data codes on the network and are therefore intangible. Take the transmission of an e-mail message as an example. This information must first be decomposed by the server into millions of data packets, and then transmitted to a destination server through different network paths according to the TCP/IP protocol and reorganized and forwarded to The receiver, the whole process is completed instantly in the network. E-commerce is a special form of digital transmission activities. Its intangible characteristics make it difficult for tax authorities to control and inspect the transaction activities of sellers. The transaction records faced by tax authorities are all embodied in the form of data codes, which makes tax verification Employees cannot accurately calculate sales income and profit income, which brings difficulties to taxation.
Digital products and services based on the characteristics of digital transmission activities are bound to be intangible. Traditional transactions are based on physical transactions, while in e-commerce, intangible products can replace physical objects as the object of transactions. Take books as an example. The typesetting, printing, sales and purchase of traditional paper books are regarded as the production and sales of products. However, in e-commerce transactions, consumers can use the knowledge and information in the book as long as they purchase online data rights. However, a series of issues such as how to define the nature of the transaction, how to supervise, and how to levy taxes have brought new issues to the taxation and legal departments.
(3) Anonymous
Due to the decentralized and global nature of cross-border e-commerce, it is difficult to identify the identity of e-commerce users and their geographic location. Consumers in online transactions often do not reveal their true identity and their geographic location. What is important is that this does not affect the transaction in the least. The anonymity of the Internet also allows consumers to do so. In the virtual society, the convenience of concealing one’s identity quickly leads to an asymmetry between freedom and responsibility. People can enjoy the greatest freedom here, but only bear the least responsibility, or even evade responsibility altogether. This obviously creates trouble for the tax authorities. The tax authorities cannot ascertain the identity and geographic location of online traders who should pay taxes, and cannot know the transaction status and tax payable of taxpayers, let alone audit and verification. This part of the transaction and the taxpayer are invisible from the tax authorities, which is fatal to the tax authorities. Take eBay as an example. eBay is an online auction company in the United States that allows individuals and merchants to auction any item. As of 2019, eBay has 30 million users and auctions tens of thousands of items every day, with a total turnover of more than 5 billion U.S. dollars. But most users of eBay do not accurately report their income to the tax authorities, and there is a lot of tax evasion because they know that due to the anonymity of the Internet, the US Internal Revenue Service (IRS) has no way to identify them.
The anonymity of e-commerce transactions has led to the deterioration of tax evasion. The development of the Internet has reduced the cost of tax avoidance and made e-commerce tax avoidance easier. The anonymity of e-commerce transactions makes it possible for taxpayers to use online financial institutions in tax havens to avoid tax regulation. The widespread use of electronic money and the “complete tax protection” provided by the Internet in certain tax-haven online banks have allowed taxpayers to remit their investment income from countries around the world directly to tax-haven online banks. Payable income tax. The U.S. Internal Revenue Service (IRS) found in its largest audit investigation that a large number of resident taxpayers conceal a large amount of taxable income through financial institutions in offshore tax havens. The U.S. government estimates that about three trillion US dollars of funds are hidden in tax havens due to the “full tax protection” of online banks in tax havens.
(4) Timeliness
For the network, the speed of transmission has nothing to do with geographic distance. In the traditional transaction mode, information exchange methods such as letters, telegrams, faxes, etc., there is a time difference of different lengths between the sending and receiving of information. For information exchange in e-commerce, regardless of the actual time and space distance, one party sends information and the other party receives information almost at the same time, just like face-to-face conversation in life. Certain digital products (such as audio-visual products, software, etc.) transactions can also be cleared instantly, and ordering, payment, and delivery can be completed in an instant.
The immediacy of e-commerce transactions improves the efficiency of people’s communication and transactions, and eliminates the intermediary links in traditional transactions, but it also hides the legal crisis. In the field of taxation: the immediacy of e-commerce transactions often leads to the arbitrariness of transaction activities. The transaction activities of e-commerce entities may start, terminate, and change at any time, which makes it difficult for tax authorities to grasp the specific transaction conditions of both parties. , Not only makes the control methods of tax withholding at the source fail, but also objectively promotes the arbitrariness of taxpayers to fail to comply with the tax law, coupled with the serious lagging effect of modern tax collection and management technology in the tax field, all make tax administration by law pale and weak.
(5) Paperless
E-commerce mainly adopts paperless operation, which is the main feature of transactions in the form of e-commerce. In e-commerce, electronic computer communication records replace a series of paper transaction documents. Users send or receive electronic information. Because electronic information exists and is transmitted in the form of bits, the entire information sending and receiving process has been paperless. The positive impact brought by paperlessness is to get rid of the restrictions of paper in the transmission of information. However, since many regulations of traditional laws are based on the regulation of “paper transactions”, paperlessness has brought legal restrictions to a certain extent. confusion.
E-commerce intercepts written contracts and settlement bills in traditional trade with digital contracts and digital time, which weakens the ability of tax authorities to obtain the business status and financial information of multinational taxpayers. Other confidential measures adopted by e-commerce will also increase tax authorities. The difficulty of grasping taxpayer’s financial information. In the case of undocumented transactions, the declared amount of multinational taxpayers will be greatly reduced, and the taxable income and the amount of tax collected will be less than the actual amount achieved, which will cause the taxation country to lose international tax . For example, stamp duty, one of the traditional taxes generally levied in various countries in the world, is subject to the written vouchers provided by the parties to the transaction. The taxation link is the writing or completion of various legal contracts and vouchers. However, there is no paper in online transactions. Under the situation of globalization, the physical form of contracts and voucher forms no longer exist, so there is no way to start the stamp tax contract and voucher applique (that is, to complete the payment of the stamp tax).
(6) Rapidly Evolving
The Internet is a new thing. At this stage, it is still in its infancy. The future development of network facilities and corresponding software protocols has great uncertainty. But the issue that tax law makers must consider is that the Internet, like other newborns, will evolve at an unprecedented speed and in an unpredictable way. Internet-based e-commerce activities are also in a rapidly changing process. In just a few decades, electronic transactions have experienced the rise of EDI to e-commerce retail, and digital products and services are constantly changing. Changing the lives of human beings.
In general, in order to maintain social stability, countries will pay attention to maintaining the continuity and stability of the law, and tax laws are no exception. This will cause the contradiction between the rapid development of the Internet and the relatively lagging tax laws and regulations. How to incorporate network transactions, which are in development and change every second, into the regulation of the tax law is a difficult problem in the taxation field. The development of the Internet continues to bring new challenges to tax authorities. Tax policy makers and tax law legislators should pay close attention to the development of the Internet, and fully consider this factor when formulating tax policies and tax laws and regulations.
Transnational e-commerce has many characteristics that are different from traditional trade methods, but the traditional tax law system is generated under the traditional trade methods, and it will inevitably be full of loopholes in e-commerce trade. The Internet has a profound impact on human society, and it has also brought unprecedented shocks and challenges to taxation laws and regulations.

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