The Challenge And Response Of Cross-border E-commerce To The International Tax Jurisdiction System

Cross-border e-commerce refers to an international business activity in which the trading parties,belong to different customs,achieve the deal and complete the payment through the e-commerce platform,deliver goods and services online or through the cross-border logistics,and complete the transaction.According to the transaction subject,cross-border e-commerce can be divided into business-to-business transactions,business-to-consumer transactions and consumer-to-consumer transactions.Overseas online shopping is a kind of “B2C cross-border e-commerce”.“Overseas online shopping” refers to that consumers do information retrieval about foreign goods and services through the network,use the electronic orders to issue a purchase offer,and complete payment through the network tools,or reach the other terms of payment with the foreign sellers through electronic means,and then the sellers handle the order through the network,and provide goods or services through the network or cross-border mail methods.Cross-border e-commerce has the characteristics of concealment,invisibility and universality.Concealment refers to the fact that the face-to-face transaction of each subject is not necessary,and their names,residence,operation and management places can be concealed.Invisibility includes the sale of goods and services and the transaction process.The universality of cross-border e-commerce mainly refers to the universality of the trading subject,which can also be referred to as being global or multilateral,which is also a trend of the development of cross-border e-commerce.The international tax jurisdiction including income tax jurisdiction and transfer tax jurisdiction.This article only discusses the income tax jurisdiction,which includes the residence jurisdiction and the source jurisdiction.A country may impose a tax on income because of a nexus between the country and the person earning income.A jurisdictional claim over this nexus is called residence jurisdiction.Income may be taxable under the tax laws of a country because of a nexus between that country and the activities that generated the income.A jurisdictional claim based on such a nexus is called source jurisdiction.The key of dividing residence jurisdiction is to confirm the resident status,and natural person and legal person have different judgment standards.The premise of dividing source jurisdiction is to determine the source of income,and different standards are adopted for the income of different properties.Because of the different standards,the residence jurisdiction and the source jurisdiction conflict separately and mutually,and OECD Model provides a coordinated solution to the conflict.Based on the above characteristics,the seller can change the status through the network conveniently and quickly,can be engaged in business activities in other countries without having to set up home in the country,can provide the sales activities through the network which originally must be carried out after he was present.For enterprise sellers,operation and management do not need physical space,and with the aid of network interaction,telecommuting and online transactions cause the focus on physical space no longer the inevitable requirement of company management.The traditional division of residence jurisdiction is meaningless.Similarly,the traditional tax jurisdiction no longer applies to "overseas online shopping".Enterprises can participate in other countries' economies without the need to set up physical business premises in these countries,thus avoiding the existence of the permanent establishment defined in OECD Model paragraph 1 of article 5.The "fixity" of the permanent establishment is difficult to determine.In addition,many business activities that are considered to be preparatory or auxiliary in traditional trades play an important role in "overseas online shopping".In this paper,the main alternatives are analyzed and the brief summary is as follows.The residents' tax jurisdiction plan calls for the strengthening of the management of residents' tax jurisdiction,while reducing or even ignoring thedecision of the origin in the tax jurisdiction.About innovation of the concept of "permanent establishment" : it is not surprising that the places used to store or deliver goods are as "permanent establishment".This can expand source jurisdiction.However these series of alternatives lack innovation and breakthrough,and the so-called improvement solution has only a complement and perfection to the traditional concepts and rules.The level of "innovation" does not accord with the requirement of digital economy background.The withholding tax plan would lead to online sellers and offline sellers who have the same behavior facing different tax collection and administration patterns.Through "overseas online shopping" and other such specific processes,although there is no fixed operators for non-resident sellers,as long as they use the network in the consumers' countries namely the source countries and have carried on the substantive economic activities,and the close effective contact with the countries' economy has produced,we can conclude that the sellers have virtual permanent establishment there.In addition,the business income produced by this virtual permanent establishment should be treated with the tax priority by the source country.It is an expansion of the concept of the traditional permanent establishment,which does not result in the different treatment to traditional business,and the obstruction of the reform is small.At the same time,compared with the over-conservative reform plan,it has some flexibility,which is feasible in operation.The essentials that constitute this "virtual permanent establishment" include four factors.(1)The non-resident sellers use the Internet to carry out the business activity according to the tax law of the source country.(2)The transaction data used for profit by the seller is obtained on a regular basis through the source country.(3)The above business activities of the seller must be continuous and significant to its main business.(4)Failing to meet the preparatory or auxiliary activities prescribed in paragraph 4 of article 5 of OECD Model.