Legal Research On Web Shop Tax

According to China’s relevant laws, shops engaged in profitable commercial activities have the obligation to pay taxes. However, because of our current tax system is more applicable to entity trade than to electronic trade, plus entity and e-trade differ a lot, most of the web shops do not pay taxes according to law. Therefore e-commerce has become a hardest hit of tax evasion and tax avoidance, and there is a call for legislation.The first part of the thesis discusses the necessity of taxation collection of web shops. By comparing the agreement represented by the European Union with the disagreement represented by the United States and other countries’electronic taxation system in accordance with their international economic position, we find that it is necessary to levy tax to e-commerce while there is no need to levy any new taxation. Taking the economic basis, legal basis and social basis and experience of other countries into consideration, we will discuss the feasibility of taxing web shops.The second part discusses the subject of the action of ratepaying. Among all kinds of models, there is no deny that the most profitable models are B2C and B2B. In B2B and B2C models, web shops are partly run directly by entities, and they are supervised by the taxation bureau after commercial and tax registration. Nevertheless some B2C and B2B model shops are naturally generated from C2C online shops. I think we should consider the compromise as a starting point, and gradually move closer to the entities of tax-paying shops. Because the compromise is still said to be ignoring the business registration which is considered as a foundation of industrial and commercial supervision and tax management. This fact leads miniature web shops to have no legal qualifications.The third part is about categories of taxes. Taxes can be classified in to different categories according to delineation of power, legislative purpose, functions, collection targets, the different scope of application. Those which are closely related to web shops taxation are mainly turnover tax and income tax. Turnover tax consists of value added tax, operation tax, tariff and consumption tax. Income tax is divided into enterprise income tax and personal income tax. For online purchasing agency, which is also an activity of normal consignment and sales, they should pay relevant tax in accordance with the laws and regulations.The fourth part is about tax jurisdictions. The authority of tax collection and income attribution can be different depending on different tax categories. China adopts the principle that the tax authorities where the main business is implemented are responsible for VAT levy and jurisdiction. However, web shops normally conduct inter-province transactions, consumers are very likely to bear the tax obligations if we only obey to the previous principle due to the tax shifting. Viewing from this point, national unified jurisdiction can not only simplify the tax processes and increase efficiency but also avoid double taxation originating form territorial jurisdiction and, as a result, reduce the tax burden on web shops while effectively preventing tax evasion.