Washington International Law Journal


The Internet's current architecture allows international e-commerce transactions of digitized goods to go untaxed by the country in which the income was earned or the product consumed. The inability of these countries to tax such transactions will erode their tax bases as e-commerce in digitized products grows relative to other commercial forms. To forestall the erosion of its tax base, Singapore's revenue authority boldly extends its existing consumption and income tax policies to e-commerce. Singapore's proposed e-commerce tax regime is a model from which other countries—both those with similar tax regimes, such as the E.U. member economies, and those that trade with them, like the United States—may learn. While Singapore's e-commerce tax policy provides guidance and strives to promote internationally accepted tax principles, it also raises concerns of exposing e-vendors of digitized products to double-taxation, overly burdensome compliance costs, and unequal tax treatment, both between small- to medium-sized e-vendors and their larger competitors, and between e-vendors and brick-and-mortar entities. The Singapore government should clarify that domestic consumption of digitized products purchased from foreign e-vendors will be taxed; conclude a bilateral tax treaty with the United States government to alleviate double-taxation concerns; adopt a standard to clarify which transactions will give rise to ordinary income and which to royalty income; monitor the economic consequences of the consumption tax registration threshold, the policy to base consumption tax jurisdiction on where the customer purports to reside or on the customer's domain name or IP address, and the requirements on e-vendors to obtain residency declarations from its customers and collect and remit the consumption tax; and share its e-commerce tax ideas and experiences with the international community, in particular the OECD member states, to negotiate e-commerce tax protocols that strengthen its e-commerce tax regime.

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