Consumption Taxation and Electronic Commerce
: Issues, approaches and a way forward

  • Konstantinos Siliafis

Student thesis: Doctoral ThesisDoctor of Philosophy


Internet and the development of electronic commerce transformed the nature of commercial activities. It also created significant challenges to taxation principles and the relevant authorities. This thesis is taking the approach that electronic commerce should be subject to taxation, because despite the unique characteristics it is nonetheless a commercial activity. New methods of delivery and digitisation of products raise particular problems for principles of consumption tax and for governments failing to utilise their tax policies for collecting revenue to subsequently fund welfare initiatives and the public sector. This thesis will identify and analyse the challenges presented, as well as examine the current regulatory approaches, whether they are primary legislative measures or merely “soft law”. The two major actors in this area are currently the European Union and the United States; however the approaches between the two have been distinctly different. Originally an official “moderator” was not established, which drove the OECD to assume the role in an informal capacity. The US did initially take a “hands off” approach in relation to electronic commerce taxation and did not implement any such legislation at a Federal level. This ended up causing problems to online vendors and consumers. However with initiatives such as the Streamline Sales and Use Tax Agreement as well as the Marketplace Fairness Act, the US is slowly taking more active steps to engage the ongoing developments. On the other side, the EU begun from a different perspective to the US. EU made significant and numerous attempts to regulate consumption taxes on online sales. The initiative shown by the EU and the nature of the European Single Market meant that the Member States started operating on a basis of close cooperation with each other in relation to electronic commerce activities and taxation earlier than US States. The new EU rules coming into operation from January 2015 identify the point of consumption as the point where tax is to be levied and indicates a dynamic European approach, one which could be establishing an efficient precedent and potentially followed by many other non-EU jurisdictions. This thesis will support the idea for a harmonisation of the tax principles relating to consumption taxation. Harmonisation can be seen as a problem in itself due to being a rather complex procedure, which becomes more complicated in regards to consumption taxation, especially taking into consideration that taxation can be indicative as a sovereign aspect of a State. The OECD guidelines on Electronic Commerce Taxation in 1998 have set the groundwork in the area and established general directions for States. Currently there is a seemingly similar direction EU and the US are heading to, which may indicate the possibility of a harmonised consumption taxation system between EU, the US and other participating jurisdictions being perhaps less of a regulatory utopia. A harmonised tax system for electronic commerce could promote further development of a more efficient commercial, as well as a more enriched socio-political reality.
Date of Award14 Dec 2015
Original languageEnglish
Awarding Institution
  • Aberystwyth University
SupervisorDavid Poyton (Supervisor) & Uta Kohl (Supervisor)

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