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1、Implications for developing countriesUNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTPolicy reviewIndirect taxation of e-commerce and digital tradeImplications for developing countriesUNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTPolicy reviewIndirect taxation of e-commerce and digital tradeGe

2、neva,2025 2025,United NationsAll rights reserved worldwideRequests to reproduce excerpts or to photocopy should be addressed to the Copyright Clearance Center at .All other queries on rights and licences,including subsidiary rights,should be addressed to:United Nations Publications405 East 42nd Stre

3、etNew York,New York 10017 United States of AmericaEmail:publicationsun.org Website:https:/shop.un.org/The findings,interpretations and conclusions expressed herein are those of the author(s)and do not necessarily reflect the views of the United Nations or its officials or Member States.The designati

4、ons employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or bou

5、ndaries.Mention of any firm or licensed process does not imply the endorsement of the United Nations.This publication has been edited externally.United Nations publication issued by the United Nations Conference on Trade and DevelopmentUNCTAD/DTL/ECDE/2024/2ISBN:978-92-1-113092-8eISBN:978-92-1-00251

6、8-8Sales No.E.23.II.D.4Indirect taxation of e-commerce and digital tradeImplications for developing countriesiiiAcknowledgementsThe present report,Indirect Taxation of E-commerce and Digital Trade:Implications for Developing Countries,was prepared under the overall guidance of Shamika N.Sirimanne,Di

7、rector of the UNCTAD Division on Technology and Logistics by a team comprised of Torbjrn Fredriksson,Christopher Grigoriou(consultant),Grgoire Rota-Graziosi(consultant),Ccile Barayre,Andrew Williamson and Rodrigo Saavedra.Contributions by Daniel Ker,Smita Lakhe and Thamara Romero are also appreciate

8、d.UNCTAD gratefully acknowledges the contributions from the Governments of Angola,the Plurinational State of Bolivia,Cambodia,Malaysia,Nigeria,Singapore,Switzerland,Thailand,and Uganda.Other written contributions were also received from Thomas Ecker(Organisation for Economic Co-Operation and Develop

9、ment),Ubaldo Gonzalez de Frutos(Inter-American Development Bank),Dulith Herath(Kapruka),George Salis(Vertex),Fredy Richard Llaque Snchez(University of Lima),Nancy Aguirre Arredondo(National Major University of San Marcos),Solomon Rukundo(Mawazo Tax Policy Research Centre),Stephanus Van Zyl(Universit

10、y of Pretoria/African Tax Administration Forum)and Emeka Nwankwo(African Tax Administration Forum).Comments and inputs received during the peer review process are acknowledged with appreciation:Emeka Nwankwo,African Tax Administration Forum;David Bradbury,Piet Battiau,Maria Resnick,Organisation for

11、Economic Co-Operation and Development;Tibor Hanappi,Adam Jakubik,Jan Loeprick,Michele Ruta,International Monetary Fund;and Patricia Ann Brown,Department of Economic and Social Affairs of the United Nations.The publication benefited significantly from discussions and inputs during an Ad Hoc Expert Gr

12、oup Meeting on Electronic Commerce and Taxation,which took place virtually from 7 to 8 June 2022.The desktop publishing and cover design of the publication were prepared by Natalia Stepanova and administrative support was provided by Cynthia Faure,of UNCTAD.Editing of the document was done by Nancy

13、Biersteker.Financial support from the Governments of Germany,the Kingdom of the Netherlands,Sweden and Switzerland is gratefully acknowledged.Indirect taxation of e-commerce and digital tradeImplications for developing countriesivTable of ContentsAcknowledgements.iiiList of Figures,Tables and Boxes.

14、viForeword.viiAbbreviations.viiiNotes.ixExecutive summary.xIntroduction.1A.Trends in e-commerce and digital trade and implications for taxation.31.E-commerce and digital trade are growing fast .32.Definitions of e-commerce and digital trade.53.E-commerce,digital trade and taxation challenges.11B.Ind

15、irect taxation of e-commerce in developing countries:opportunities and challenges.151.Why VAT is increasingly important.152.Indirect taxation opportunities and challenges in developing countries.173.Indirect taxation beyond VAT.214.Cross-border specific rules:moratorium on electronic transmissions a

16、nd de minimis rules on imports.22C.Indirect taxation of e-commerce:main opportunities,challenges and lessons learned.291.Implementation trends related to indirect taxation in the digital economy in developing countries:an overview.292.Role of marketplaces and digital platforms in tax collection and

17、risk management.313.Initiatives and rules to monitor and manage non-resident vendors.39D.Conclusions and policy recommendations.54Indirect taxation of e-commerce and digital tradeImplications for developing countriesvAnnex:Lessons from Selected Countries,Private Sector,Research Institutes,Internatio

18、nal and Regional Organizations.63A.Country Perspectives.651.Angola:Administrative measures from the taxation of online trade of goods and services during COVID-19 .652.Nigeria:Modernizing e-commerce taxation to meet international standards .673.Uganda:Taxation of the informal sector,challenges and o

19、pportunities.714.Cambodia:E-commerce tax law and technology challenges .755.Malaysia:Alternative tools used to tax e-commerce .786.Singapore:Singapores Implementation of the Overseas Vendor Registration Regime.837.Thailand:VAT on Electronic Services in Thailand .868.Switzerland:Facing the challenge

20、of e-commerce VAT collection through gradual legal reform .879.Bolivia:The experience with taxation of non-resident e-commerce service providers .92B.Private Sector Perspectives.1001.Vertex:The importance of technological solutions .1002.Kapruka:Tax challenges for enabling cross-border e-commerce in

21、 Asia from the private sector perspective .104C.Academia&Research Institutions.1071.National Major University of San Marcos and the University of Lima:.1072.Mawazo Tax Policy Research Centre:Tax implications of the growing use of social media for e-commerce.112D.Global and Regional Organizations.118

22、1.Organisation for Economic Co-operation and Development(OECD):Global standards and guidance The VAT Digital Toolkits to support VAT collection on e-commerce in developing countries .1182.African Tax Administration Forum(ATAF):Tailoring legal reform for e-commerce taxation in African countries.1233.

23、Inter-American Development Bank(IDB):How can development partners assist to facilitate reforms of cross-border e-commerce taxation;the Latin American experience .131Indirect taxation of e-commerce and digital tradeImplications for developing countriesviList of Figures,Tables and BoxesLift of boxesBo

24、x 1 E-commerce and digital trade.6Box 2 The case of online gambling and lotteries.21Box 3 Country experiences with de minimis.24Box 4 The role of peer-to-peer(P2P)platforms to collect local taxes:the case of Airbnb.36Box 5 WCO e-commerce framework of standards.38Box 6 Double taxation agreements.47Bo

25、x 7 Regulatory and Normative Developments in Electronic Invoicing and Digital Services.93Box 8 Customs regulations for non-habitual importers(not in person).94Box 9 Treatment of small purchases in Peru.108Box 10 VAT Digital Toolkit-Structure for the LAC Region.134FiguresFigure 1 E-commerce through t

26、he COVID-19 pandemic.4Figure 2 Units within all sectors of the economy engage in e-commerce.6Figure 3 E-commerce and digital trade fundamental concepts and definitions.7Figure 4 Categorization of the forms of commerce.8Figure 5 Examples of Digital Intermediation Platforms(DIPs).11Figure 6 Compositio

27、n of transactions by type of activity 2016 2021.95Figure 7 Operations carried out by digital services 2021.96TablesTable 1 Indirect tax revenue in selected developing countries,VAT liability thresholds and rates,various years.19Table 2 Regulation on the role of digital platforms to collect VAT/GST-d

28、eveloped countries.32Table 3 Regulation on the role of digital platforms to collect VAT/GST-developing countries.34Table 4 Africa-Rules for non-resident registrations to VAT/GST,selected countries.42Table 5 Asia-Rules for non-resident registrations to VAT/GST,selected countries.43Table 6 Latin Ameri

29、ca and Caribbean-Rules for non-resident registrations to VAT/GST,selected countries.45Table 7 Withholding mechanisms on payments to non-resident vendors,selected countries.46Table 8 Main issues and options related to indirect taxation of e-commerce.56Table 9 Determination of Place of Supply for Digi

30、tal Goods.125Indirect taxation of e-commerce and digital tradeImplications for developing countriesviiForewordDigitalization of economies has led to a surge in e-commerce and digital trade around the world.It has also accelerated the development of a range of innovations being undertaken by tax admi

31、nistrations,both in how they interact with taxpayers and in their internal operations.With the ongoing shift to digital services and digital channels dominating interactions with taxpayers,adequate taxation of e-commerce has become an urgent financial and policy priority.This report is a timely cont

32、ribution to understand the significant implications and challenges of e-commerce and digital trade for taxation authorities,based on the policies put in place by several countries.Understanding different approaches to e-commerce,digital trade and taxation is important to facilitate international tra

33、de and online commerce.The report identifies key concerns that need to be addressed in term of policies and implementation mechanisms.Based on the various experiences at the global,regional and national level,it considers possible future policy options,taking the concerns of all stakeholders into ac

34、count.The role of tax administrations needs to evolve to keep abreast of the pace of change of new technologies and the economic landscape.Tax administrations are exploring innovative solutions to strengthen domestic resource mobilization and stabilize finances greatly needed for investments in deve

35、lopment.While objectives,functions and processes of tax administrations are similar in most countries,the scope,timing,and choice of instruments used have to be adapted to national contexts.This report presents an overview of the different strategies,solutions,technical instruments,and approaches be

36、ing used in various countries in the area of indirect taxation of domestic and cross-border e-commerce.It surveys and analyses pertinent legal and policy issues that policymakers need to consider in this context.I would like to acknowledge with appreciation the valuable contributions received from s

37、everal stakeholders.I hope that the findings of the report will serve as a basis for a much-needed global dialogue on this topic of growing importance.Torbjrn FredrikssonHead,E-Commerce and Digital Economy BranchDivision on Technology and LogisticsAbbreviationsADBAsian Development BankATAF African T

38、ax Administration Forum B2BBusiness-to-businessC2CConsumer-to-consumerCATAThe Commonwealth Association of Tax AdministratorsCARICOM Caribbean CommunityCOTA Caribbean Organisation of Tax AdministratorsCIAT Inter-American Center of Tax AdministrationsCOVID-19 Coronavirus diseaseDIPDigital intermediati

39、on platformDRM Domestic Revenue MobilizationDTAs Double Taxation Agreements ECLACEconomic Commission for Latin America and the CaribbeanEU European UnionGST Goods and services tax G20 Group of TwentyICT Information and communications technologyIDB Inter-American Development BankIMFInternational Mone

40、tary FundIoT Internet of ThingsLACLatin America and the CaribbeanLDCLeast developed countryMSMEMicro,small and medium-sized enterpriseOECD Organisation for Economic Co-operation and DevelopmentPE Permanent EstablishmentPITAAThe Pacific Islands Tax Administrators Association SDGsSustainable Developme

41、nt Goals SMESmall and medium-sized enterpriseVAT Value added taxWBG World Bank GroupWCOWorld Customs OrganizationWTOWorld Trade OrganizationIndirect taxation of e-commerce and digital tradeImplications for developing countriesixNotesWithin the United Nations Trade and Development(UNCTAD)Division on

42、Technology and Logistics,the E-Commerce and Digital Economy Branch carries out policy-oriented analytical work on the development implications of information and communications technologies(ICTs),e-commerce and the digital economy.It is responsible for the preparation of the Digital Economy Report(D

43、ER)as well as thematic studies on ICT for Development.The Branch promotes international dialogue on issues related to ICTs for development and contributes to building developing countries capacities to measure the digital economy and to design and implement relevant policies and legal frameworks.It

44、also monitors the global status of e-commerce legislation(UNCTAD Cyberlaw Tracker).Since 2016,the Branch has coordinated a multi-stakeholder initiative entitled eTrade for all(etradeforall.org),which aims to improve the ability of developing countries,particularly least developed countries,to use an

45、d benefit from e-commerce.UNCTADs work on E-commerce and Law Reform has been supporting developing countries in Africa,Asia and the Pacific,and Latin America in their efforts to establish legal regimes that address challenges raised by ICTs to ensure trust in online transactions,ease the conduct of

46、domestic and international trade online,and offer legal protection for users and providers of e-commerce and e-government services.When the United States is mentioned,reference is made to the United States of America,and when the United Kingdom is mentioned,reference is made to the United Kingdom of

47、 Great Britain and Northern Ireland.Reference to companies and their activities should not be construed as an endorsement by UNCTAD of those companies or their activities.The following symbols may have been used in the tables:Two dots(.)indicate that data are not available or are not separately repo

48、rted.Rows in tables have been omitted in those cases where no data are available for any of the elements in the row.A dash()indicates that the item is equal to zero or its value is negligible.Use of an en dash(-)between dates representing years signifies the full period involved,including the beginn

49、ing and end years.The term“dollars”($)refers to United States of America dollars,unless otherwise indicated.Details and percentages in tables do not necessarily add up to the totals because of rounding.Indirect taxation of e-commerce and digital tradeImplications for developing countriesxExecutive s

50、ummaryDigital transformation is drastically changing how people and businesses interact and conduct commerce.It is transforming social,business,and economic norms and changing the way we interact,consume and do business.This facilitates e-commerce in both existing and emerging markets and allows for

51、 more products to be delivered digitally.New opportunities for growth exist as new ways of business gain pace and levels of connectivity increase.These rapidly developing modern technologies pose innumerable challenges and questions for governments and tax authorities.With many governments under unp

52、recedented fiscal strain and with digital activity accelerating,tax authorities are grappling with the consequences of this shift for the sustainability of their tax bases and the efficient administration and collection of taxes.Taxing the digital economy,e-commerce and digital trade presents unique

53、 challenges for policymakers and tax administrations.The challenges associated with developing new mechanisms and frameworks for taxing goods and services in the digital economy are increasingly acute,but not new.It is timely to revisit such issues and analyze the prospects and possible advances to

54、determine the impact of the digital economy on tax systems.Significant changes to business models and value creation have implications for taxation,offering opportunities for both the private sector,by expanding potential markets,and governments,through a potential increase in revenues from new sour

55、ces of taxation.However,it also raises a need for governments to consider how to adapt their tax systems to the growing role of e-commerce and digital trade.E-commerce and the process of digital transformation also pose a threat to government revenues through tax base erosion,primarily because of th

56、e unique mechanisms inherent to e-commerce and digital delivery of products.Digital platforms and online marketplaces facilitate numerous transactions between buyers and sellers.However,this abundance of online interactions and transactions on platforms gives rise to concerns regarding the clarity a

57、nd assessment of tax responsibilities and the methods used for tax collection.These challenges can impede the accurate recording and traceability of both transactions and taxpayers.Governments need a comprehensive understanding of how to adapt their existing taxation systems,including with regard to

58、 indirect taxation.Tax controlling and auditing online transactions can be challenging.There is uncertainty concerning the nature of the relation(nexus)between jurisdictions,potential taxpayers and businesses for transactions,which can be either domestic or cross-border.Tax increasingly has to be co

59、llected from millions of end-users rather than from a small number of intermediaries for“traditional commerce”.Digital trade,which involves digitally ordered and/or digitally delivered products across borders,confronts tax administrations in all countries with new challenges.One of the key impacts i

60、s the possibility for non-resident vendors to offer their goods and services without a permanent or fixed establishment in the territory of the buyer.However,the administration of indirect taxation in the form of value added tax(VAT)or goods and services tax(GST)is not easy,especially when imposed o

61、n non-resident vendors.This is especially pertinent for digitally delivered services that,in contrast to digitally ordered goods,do not pass through customs administrations.Indirect taxation of e-commerce and digital tradeImplications for developing countriesxiDeveloping countries are increasingly i

62、mplementing new rules for e-commerce,but at different speed and with significant diversity in their implementation.A balance needs to be struck between securing tax collection while ensuring that collection processes are neither overly complex nor discriminatory.There is no“one-size-fits all”policy

63、or legislative approach.Responses and areas of reform may depend on the market size,technological capacity,the role of the informal economy,as well as other social,economic and legislative considerations.While some developing countries have already adopted a strategy to regulate e-commerce and to ad

64、dress the main indirect taxation issues,others are still only at the beginning of this process.Administrative flexibility is also important to ensure that adjustments and improvements can be adopted across the entire tax system.The multiplicity of options induces a potentially complex environment wh

65、ere foreign sellers may avoid paying or remit taxes due and/or where the compliance costs may deter firms from becoming digital,certainly evidencing a need for harmonization.The main experiences and solutions explored in this study cover the potential role of digital platforms and marketplaces at th

66、e core of the system and the initiatives and rules to monitor and manage non-resident vendors.Interestingly,all these solutions can contribute to improving a major shortfall of digital trade commonly observed beyond the taxation issues,namely the lack of reliable data and information about the users

67、 and transactions performed online.Role of the marketplaces at the core of e-commerce Online marketplaces intermediate large numbers of transactions between multiple buyers and sellers,often across borders.This makes them central nodes in the e-commerce system and in turn useful as potential tax col

68、lectors and sources of information.As tax collectors they may play a role for both domestic and cross-border transactions.As a source of information,they may provide information that can enable revenue authorities to implement proper risk management from huge quantities of data centralized and share

69、d.Relying on digital platforms to collect indirect taxes can be an opportunity to tax the unregistered economic operators(informal sector)doing business through e-commerce platforms.VAT registration for non-residents Simplified registration and compliance regimes can provide an effective solution to

70、 collect VAT on cross-border services in business-to-consumer(B2C)transactions.The last stage of VAT collection mechanism is the weakest link of this tax,since final consumers are not VAT registered.This weakness is exacerbated when vendors are non-tax-resident.Their VAT registration aims at reducin

71、g the risk of revenue losses at this stage.Developing countries are increasingly adopting regulations requiring non-resident vendor to register for VAT with multiple different scenarios.A growing number of developing economies have also implemented a simplified registration and compliance regime for

72、 non-resident suppliers.Withholding and reverse charge mechanisms(business-to-business(B2B)e-commerce only)Some countries have implemented withholding tax mechanisms to extract VAT/GST on payments to non-resident vendors.A withholding tax mechanism is typically introduced through banks or a financia

73、l intermediary.Beyond VAT,it aims at protecting countries against tax planning and avoidance that may occur more often in the context of digitalization.However,Double Taxation Agreements(DTAs)may limit the application of withholding tax mechanisms.Indirect taxation of e-commerce and digital tradeImp

74、lications for developing countriesxii Reverse charge mechanisms shift the responsibility for paying VAT or GST from the supplier to the buyer.This mechanism may be viewed as a special case of the withholding instrument.While in a traditional VAT system,vendors generally charge VAT on their supply of

75、 goods or services,collect tax from the customer,and remit it to the tax authorities.Under the reverse charge mechanism,it is the customers that are responsible for paying VAT due on a transaction directly to the tax authorities.Although most developing countries are implementing new taxation rules

76、at the country level,a regional approach may have many benefits.A regional approach to addressing the challenges of indirect taxation of e-commerce may be specifically relevant for developing countries because:(1)many developing countries belong to a regional economic community(and some even to a cu

77、stoms union),and a regional approach to taxation could foster economic integration;(2)the bargaining power of individual countries remains limited against multinational digital platforms,and regional cooperation may reinforce their position;and(3)regional cooperation may secure revenue and reduce co

78、mpliance costs by avoiding multiple disparate registration processes.Despite remaining challenges,developing countries are making meaningful progress towards taxing the digital economy.Challenges with the taxation of the digital economy have led to tax reform initiatives that could significantly alt

79、er current tax systems and accelerate the taxation of the digital economy.As of June 2024,101 countries had enacted indirect taxes on transactions in the digital economy,with the aim of enhancing efficiency.The evolution of digital administration responses to the challenges of digitalization are not

80、 restricted simply to tax policy and legislative changes.Many developing countries are also adopting technological solutions to improve their own tax administrative processes related to tax collection and compliance.Moreover,new communications and information approaches are being considered to inter

81、act with taxpayers under a new framework,in which a mutual exchange between transparency and certainty with them can be established.What is fundamental is a dual focus on enforcement and facilitation,which will underpin a range of desirable reforms to achieve modest,but consistent,revenue gains in d

82、eveloping countries.In turn,countries can make meaningful progress towards effective,equitable and accountable tax systems.IntroductionIndirect taxation of e-commerce and digital tradeImplications for developing countries2Digitalization of the economy has reshaped the dynamics of interactions and tr

83、ade for both individuals and businesses,offering an unparalleled expansion of global trade,with businesses and consumers having direct access to a wide range of goods and services that were previously out of reach.It also offers governments the possibility of increasing their fiscal revenues.However

84、,digital adoption,including in connection with the adaptation of taxation systems,is uneven around the globe with many economies still on the digital sidelines.This report focuses on the implications for developing countries of indirect taxation of e-commerce and digital trade.It provides an overvie

85、w of the main challenges,implications and recommendations for tax administrations,capitalizing on experiences of policies and actions put in place in several regions and countries and from international and regional organizations.It introduces recent trends in e-commerce,explores why e-commerce give

86、s rise to unique taxation considerations,and defines various forms of e-commerce and digital trade.It contextualizes these issues within the broader landscape of indirect taxation in developing countries,establishing a connection between the indirect taxation challenges faced by developing countries

87、 and the requirements of e-commerce.Finally,it presents an overview of the primary issues and obstacles related to indirect taxation of e-commerce and digital trade,drawing upon insights gained from both developed and developing countries.In addition,the annex of the report presents a compilation of

88、 contributions prepared by governments,international organizations,civil society and private sector stakeholders,shining a light on challenges and solutions to the adaptation of indirect taxation systems to e-commerce and digital trade.By bringing together recent research and country experiences,the

89、 report highlights possible options for developing countries that seek to improve their systems for raising government revenue through indirect taxation.It reviews technical challenges to establishing policies and implementation structures.It also outlines approaches to overcome them and increases a

90、wareness of the specificities of e-commerce and digital trade indirect taxation.Indirect taxation of e-commerce and digital tradeImplications for developing countries3A.Trends in e-commerce and digital trade and implications for taxationFor many developing countries,e-commerce and digital trade have

91、 the potential to promote economic growth,job creation and economic diversification.Additional opportunities include generating revenues,notably for governments through tax collection on e-commerce trade flows and activity.Conducting digital trade and business through online platforms makes e-commer

92、ce a potential economic driver.This potential can be fully harnessed if governments in developing countries succeed in capturing the opportunities presented by digital transformation and e-commerce.However,many countries encounter obstacles when it comes to enabling widespread access to e-commerce a

93、nd digital trade.These challenges often revolve around aspects such as digital infrastructure development,legal and regulatory frameworks,trade facilitation,logistical hurdles and digital literacy.11 UNCTADs research on the eTrade readiness of developing countries:https:/unctad.org/topic/ecommerce-a

94、nd-digital-economy/etrade-readiness-assessments-of-LDCs2 https:/unctad.org/system/files/official-document/dtlecde2024d3_en.pdf3 https:/unctad.org/system/files/official-document/tdb_ede5d2_en.pdf1.E-commerce and digital trade are growing fast The pace of digital transformation,which had been steadily

95、 increasing over the past decade,was further accelerated during the COVID-19 pandemic.In 2022,it is estimated that almost$27 trillion of e-commerce sales were generated by businesses across 43 developed and developing economies accounting for around three quarters of worldwide GDP.This represents a

96、26 per cent increase over pre-pandemic(2019)levels.2 This upward trend has been maintained by the adoption of digital technologies,including for online purchases,specifically in consumer goods,resulting in a surge in e-commerce and digital transformation.3Figures from the International Telecommunica

97、tion Union(ITU)show an uptick in consumer e-commerce activity.The average share of Internet users who made purchases online increased from 53 per cent before the pandemic(2019)to 60 per cent following the onset of the pandemic(2021),across 67 countries with statistics available.Businesses and people

98、 moved online to purchase the goods and services they needed,with a significant uptake in e-commerce activity in almost all countries for which data are available,as evidenced in Figure 1.The Figure also illustrates the wide divide in the uptake of online shopping,ranging from less than 5 per cent i

99、n some developing countries to more than 80 per cent in some developed ones.E-commerce sales are estimated to have risen by 10 per cent-to$27 trillion-in 2022In 2021,online shopping spanned from under 5%in developing nations to over 80%in developed onesIndirect taxation of e-commerce and digital tra

100、deImplications for developing countries4Figure 1 E-commerce through the COVID-19 pandemicHuge increases in online shopping have been observed in many countries.In 2023,two thirds of Internet users in Bahrain shopped online,five times more than in 2019(13 per cent)-just four years earlier but before

101、the COVID-19 pandemic.In the United Arab Emirates,the share is even higher,at three quarters having tripled since 2019.Malaysia has seen a doubling in online shopping,from 35 per cent of Internet users in 2019 to 70 per cent in 2023.This has brought these countries into the same ballpark as most dev

102、eloped countries,across which online shopping rates of 60 per cent or more are common,as well as China(80 per cent).Although the rate of online shopping is much lower 4 https:/unctad.org/news/covid-19-boost-e-commerce-sustained-2021-new-unctad-figures-show and https:/unctad.org/publication/business-

103、e-commerce-sales-and-role-online-platformsin Egypt,at 36 per cent of Internet users in 2023,this is almost four times greater than in 2019.Similarly in Cte dIvoire 20 per cent of Internet users shopped online in 2022,double the rate in 2019.As more people have begun shopping online,and the amount ea

104、ch person spends online is likely also increasing,the value of online retail sales and transactions through online platforms have also increased substantially.4Variation in e-commerce adoption by individuals reflects different levels of digitalization achieved within developing countries.Major digit

105、al divides and imbalances remain,both within countries,between rural and urban areas,and Source:UNCTAD based on Eurostat Digital Economy and Society Statistics database,OECD ICT Access and Usage by Households and Individuals database,ITU World.Note:“2023”=latest available observation from 2020-23;“2

106、019”=latest available observation from 2017-19.AzerbaijanBahrainChinaCte dIvoire EgyptIrelandMalaysiaUnited Arab EmiratesUnited KingdomUzbekistanEl Salvador02550751000255075100202320192019=2023Developed countriesDeveloping countries%of Internet users making an online purchase,2023%of Internet users

107、making an online purchase,2019E-commerce increasing among individualsE-commerce decreasing among individualsIndirect taxation of e-commerce and digital tradeImplications for developing countries5between countries.Approximately 26 per cent of people in low-income countries had access to the Internet

108、in 2022 according to ITU data.5 Low download speeds,inadequate IT infrastructure and high pricing structures are still preventing generalized access and affordability of the Internet,a prerequisite to access to e-commerce.There are significant divides between urban and rural areas.In addition,gender

109、 divides preclude womens full participation in the digital economy,especially in Least Developed Countries(LDCs).This is due to barriers inhibiting mobile phone ownership and access to,and use of,the Internet.These barriers are complex in nature and reflect income inequalities,discriminatory gender

110、norms,as well as education and digital skills gaps(UNCTAD,2021).Digitalization has enabled financial inclusion through transfers of money and digital payment mechanisms.In developing countries,the share of adults making or receiving digital payments grew from 35 per cent in 2014 to 57 per cent in 20

111、21,according to the Global Findex Database(World Bank 2021).6 In Sub-Saharan Africa,33 per cent of the adult population had a mobile money account in 2021,which represents the largest share of any region in the world as the world global average was 10 per cent.7 The increase in financial inclusion h

112、as positive implications for bringing more people online in a secure and inclusive manner and presents new opportunities to better 5 See ITU,2022 Facts and Figures 2022,available at,https:/www.itu.int/hub/2022/11/facts-and-figures-2022-global-connectivity-statistics/6 See World Bank Group,2021,The G

113、lobal Findex Database 2021:Financial Inclusion,Digital Payments,and Resilience in the Age of COVID-19 available at,https:/www.worldbank.org/en/publication/globalfindex7 Sub-Saharan Africa is home to all 11 economies in which a larger share of adults only had a mobile money account rather than a bank

114、 or other financial institution account.8 Electronic data interchange(EDI)is the computer-to-computer transmission of business data such as shipping orders,purchase orders,invoices and requests for quotations in an electronic format using agreed standards.The messages are composed and processed with

115、out human intervention,which increases the speed of order processing and reduces errors.EDI is used in a wide variety of industries,including food,retail,logistics and manufacturing,to manage international supply chains efficiently(e.g.,just-in-time inventory management).9 Where manually typed messa

116、ges are automatically processed,leading to an order being placed/received,this meets the definition of digital ordering.Some“chat bots”or“virtual agents”can take orders through an automated“structured conversation,”during which the customer is prompted to provide the information needed to fill in an

117、 order form by a“computer generated,animated,artificial intelligence virtual character that serves as an online customer service representative”(IMF,OECD,UNCTAD and WTO,2023).serve women,poor people,and other groups of people often largely excluded from the formal financial system.It also enables mo

118、re people and enterprises to engage in e-commerce and digital trade.2.Definitions of e-commerce and digital tradeE-commerce transactions have been defined as the“sale or purchase of goods and services conducted over computer networks by methods specifically designed for the purpose of receiving or p

119、lacing of orders”(OECD,2011a,2011b).This may include selling via websites,applications and online marketplace platforms with digital ordering features,through voice commands issued to virtual assistants(such as those embedded in mobile phones and smart speakers)as well as via automated computer-to-c

120、omputer ordering systems.8By contrast,the mode of payment is not a determining factor.As long as an order is placed digitally,the transaction is classified as e-commerce,even if the payment is done through cash on delivery or through another offline means.Similarly,the product purchased may be digit

121、ally or physically delivered.An order placed in-person,made by telephone or fax,or communicated via manually typed messages9,is under the international definition not considered In developing countries,digital payment use rose from 35%in 2014 to 57%in 2021Indirect taxation of e-commerce and digital

122、tradeImplications for developing countries6an e-commerce transaction because these ordering channels are not“specifically designed for the purpose of receiving or placing orders.”Businesses are the main actors in e-commerce(UNCTAD,2023)both as sellers and as buyers(i.e.,of inputs purchased from othe

123、r businesses).Households are also very visibly active in e-commerce,most often as buyers,but sometimes also as sellers of goods and services.Nevertheless,both government bodies and non-profit organizations use e-commerce to make purchases and even sell goods and services.For example,government-run t

124、rain,airline and bus companies often sell tickets online.As a result,e-commerce transactions happen between all sectors of the economy.The most important e-commerce flows can be labeled as business-to-business(B2B),business-to-consumer(B2C),business-to-government(B2G),and consumer-to-consumer(C2C)(F

125、igure 2).A further important flow is e-commerce transactions occurring between these sectors and buyers or sellers abroad.International e-commerce constitutes digitally ordered trade,one component of digital trade.For more information on the relationship between e-commerce and digital trade see Box

126、1.Figure 2 Units within all sectors of the economy engage in e-commerceBox 1E-commerce and digital tradeDigital trade consists of“all international trade transactions that are digitally ordered and/or digitally delivered”(IMF,OECD,UNCTAD and WTO,2023)and is comprised of two components:digitally orde

127、red trade and digitally delivered trade(Figure 3).Digitally ordered trade comprises international e-commerce transactions those where the buyer and seller are resident in different economic territories.As a result,Source:UNCTAD.Indirect taxation of e-commerce and digital tradeImplications for develo

128、ping countries7Figure 3 E-commerce and digital trade fundamental concepts and definitionssome but by no means all e-commerce transactions are recorded within digital trade and digitally delivered trade is a subset of e-commerce.Digitally delivered trade includes trade in services that are digital in

129、 nature,such as streaming music and video services,cloud services and online software applications.Also covered are services delivered through inter-personal interactions taking place online(such as in telemedicine,e-learning),and those where in-person interactions have been replaced by online inter

130、faces(such as in online banking).The delivery of services outputs such as architectural designs,research and consultancy reports,and accounting services in the form of digital files also counts toward digitally delivered trade.Although some of the most well-known digitally delivered services such as

131、 streaming media subscriptions are often also digitally ordered,this is far from the case for all digitally delivered services.For example,both consumers and businesses commonly sign up in presence for telecommunications services(which are digitally delivered).Digitally delivered trade should theref

132、ore not be considered as a sub-component of e-commerce.Digitally delivered services transactions(including trade transactions)may be of interest from a taxation standpoint;nevertheless,only those which are digitally ordered are e-commerce transactions.Source:UNCTADIndirect taxation of e-commerce and

133、 digital tradeImplications for developing countries8The nature of the product being transacted also matters.As noted above,both goods and services can be digitally ordered.When the seller is resident in the taxing jurisdiction,the collection of direct or indirect taxes should be relatively straightf

134、orward.However,when the seller is not resident and the transaction is a digital trade transaction the nature of the product being transacted has implications for taxability.Digitally ordered goods must physically cross the border when being imported to the buyers country.As with all merchandise trad

135、e,this gives an opportunity for the application of revenue-raising measures at customs.As well as affecting how orders are placed and received,digitalization is enabling a wide range of services to be supplied remotely into homes and workplaces by providers from around the world.This digitally deliv

136、ered trade consists of“all international trade transactions that are delivered remotely through computer networks.”This includes trade in services that are digital in nature,such as streaming music and video services,cloud services and online software applications.Services delivered through inter-pe

137、rsonal interactions taking place online(such as in telemedicine,e-learning),and those where in-person interactions have been replaced by online interfaces(such as in online banking)are also covered.The delivery of services outputs such as architectural designs,research and consultancy reports,and ac

138、counting services in the form of digital files also counts toward digitally delivered trade.Because these services enter the economy“invisibly”via the Internet,they pose critical challenges for the application of indirect taxes.Figure 4 brings together these two facets digital vs physical ordering a

139、nd digital vs physical delivery to provide an overview of the transactions that are scrutinized in this report.Cross-border e-commerce in services confronts tax administrations with new and complex situationsFigure 4 Categorization of the forms of commerceCategories(1)and(2)cover most e-commerce tra

140、nsactions,namely physical items and in-person delivered services(1)and digitally delivered services(2)ordered online through interfaces specifically designed for the purposes of placing and receiving orders.Goods are physical,produced objects over which ownership rights can be established and transf

141、erred(SNA 2008,p.623).By contrast,services are outputs produced to order and which cannot be traded separately from their production.Services are Indirect taxation of e-commerce and digital tradeImplications for developing countries9not separate entities over which ownership rights can be establishe

142、d(SNA 2008,paras 6.8-6.9).Both the production of,and international trade in,services differ from production and trade related to goods.International trade in goods is conducted separately from production.For example,goods may be produced in one economy and subsequently delivered to residents,who may

143、 or may not be known when production occurs,of another economy.In contrast,the production of a service is linked to an arrangement made between a particular producer in one economy and a particular consumer or group of consumers in another,prior to the time this production occurs(OECD 2008,Glossary

144、of Statistical Terms,citing BPM6 para 185).Importantly,although the production and supply of some services,such as haircuts,surgical acts,and logistics and delivery,necessarily involve physical delivery,an increasing range of services can be delivered digitally.Such digitally delivered services are

145、the subject of category(2)and(4).Goods and services are ordered from a dedicated interface.Ordering can be made through marketplaces or web merchant sites,or any other digital method specifically designed for the purpose of placing and receiving orders.They may be delivered either physically or digi

146、tally.Goods are imported physically while many services(especially B2C)can be digitally delivered(books,movies,music,gaming).Goods and services are closely related.A recent trend fostered by the digitalization of the economy is its“servitization.”This consists of adding services to goods and even re

147、placing goods by services.Digital servitization,which corresponds to a combined 10UNCTAD,through its eTrade readiness assessments and Pacific Digital Economy Report 2022,document how social media are used by businesses of developing countries to sell online.move from physical products to digital ser

148、vices,concerns all industrial sectors.Gebauer et al.(2021)provides several examples of companies(e.g.,Siemens,General Electric,Intel)engaged in this transformation.They can be supplied by a resident(domestic transaction)or non-resident seller(cross-border transaction).These e-commerce transactions m

149、ost often occur through B2B or B2C.Categories(3)and(4)are not e-commerce according to the OECD definitions as they are not digitally ordered.Category(3)concerns goods from traditional commerce.This includes orders directly from brick-and-mortar premises,as well as orders placed by phone,fax,manually

150、 typed messages,electronic messaging services and non-dedicated interfaces,meaning the ordering has not been validated through automated interface.While not covered by the OECDs definition of e-commerce,it should be noted that in many developing countries,the use of social media and various mobile s

151、ervices is common to enable commercial transactions.10Commercial transactions performed through electronic messaging services or social media often rely on information(pictures,price)exchanged without any dedicated interface or automated validation of the transaction.They mostly correspond to inform

152、al transactions,similarly to informal transactions“in the real world”operated in the street.These informal transactions correspond to the following potential situations:(1)subsistence transactions,or small sellers under the threshold requesting to register to VAT/GST:then no indirect taxation is mis

153、sed on these operators;(2)sellers who fail to comply by refusing to register while beyond the legal threshold.In the latter case the problem is not about the taxation scheme but about its enforcement.Indirect taxation of e-commerce and digital tradeImplications for developing countries10It is diffic

154、ult to measure the order of magnitude of such transactions due to a lack of data on the informal economy,that escape any form of(automated)registration or declaration.But given the general structure of informal operators,it could be a significant number of transactions,normally of low value,reflecti

155、ng a high cost for the administration for a small reward.Category(4)concerns services that are digitally delivered but not digitally ordered through a dedicated interface,and as such not considered as e-commerce transactions as previously discussed.When crossing borders,they are however part of digi

156、tal trade.Some digitally delivered services are increasingly part of aggressive strategies of firms to reduce their tax payments.This may involve declaring digital services as provided from headquarters or subsidiaries located out of the country,often in tax havens with limited taxation schemes,to a

157、 subsidiary operating within the considered country that suffers from the tax evasion.These services may be reported as digital marketing services,advisory,intellectual property,maintenance or after sale contracts.Attention should be paid to this category as it represents a major concern regarding p

158、otential losses of revenues through a limited number of transactions.The indirect taxation of these services is delicate and depends on how countries manage to protect their direct and indirect tax bases,beyond e-commerce.Digitalization has meant that local presence for firms is sometimes no longer

159、necessary to extract value from a given market.Digital transformation concerns all the economic sectors.Examples of digital services include digital storefronts and the Internet of Things(IoT).IoT corresponds to an environment where smart connected devices operate.In the context of manufacturing,equ

160、ipment is able to coordinate with other equipment to improve production efficiency.The automation of processes generates data that require software,machine learning or artificial intelligence for their analysis.These data may be stored remotely in data centers anywhere in the world.Digital Intermedi

161、ation Platforms play a particularly important role as“focal points”in the e-commerce ecosystem(see Figure 5).Defined as“Online interfaces that facilitate,for a fee,the direct interaction between multiple buyers and multiple sellers,without the platform taking economic ownership of the goods or rende

162、ring the services that are being sold(intermediated)”(IMF,OECD,UNCTAD,and WTO,2023),facilitate sellers access to the online marketplace by providing features to list products for sale,take orders,receive payments,and in some cases to deliver services digitally via the platform.Indirect taxation of e

163、-commerce and digital tradeImplications for developing countries11Figure 5 Examples of Digital Intermediation Platforms(DIPs)Because of their role in facilitating large volumes of transactions between numerous online buyers and sellers,DIPs have the potential to be crucial partners in the implementa

164、tion of tax policies for the digital age.3.E-commerce,digital trade and taxation challengesThis emerging business landscape carries significant implications for both direct and indirect taxation.Direct taxation is payable and paid by the same entity(household,firm).Examples include income and profit

165、 taxation.Indirect taxes are legally payable by a physical or moral person(usually,the consumer)and collected and paid by another person(usually,a firm).Examples include customs duties,excise taxes,sales taxes,goods and services tax(GST)and value added tax(VAT).E-commerce brings forth new tax challe

166、nges and opportunities.Understanding how to adapt existing taxation rules,particularly indirect taxation,is crucial to ensure effective tax collection and prevent revenue erosion.Due to declining tariff rates around the globe due to trade liberalization,customs revenues account for a declining share

167、 of government revenues.Meanwhile,digitalization has led to more products being delivered electronically,with trade in digitally delivered services showing the highest growth rate of all kinds of trade.Value added tax(VAT),which is based on domestic consumption,is increasingly becoming an important

168、source of tax revenue also in developing countries.Understanding how to adapt existing taxation rules is crucial to ensure effective tax collection and prevent revenue erosion BUYERS&SELLERS MARKETPLACE BUYERS&SELLERS MARKETPLACE Platforms that bring together users to trade goods and services,e.g.,p

169、latforms facilitating short-term accommodationSHARED ASSETS PLATFORMSSHARED ASSETS PLATFORMSfacilitating sharing of household assets,such as car-sharingRIDE HAILING FACILITATING RIDE HAILING FACILITATING PLATFORMSPLATFORMSPlatforms offering services similar to taxi servicesDIGITAL CONTENT DISTRIBUTI

170、ON DIGITAL CONTENT DISTRIBUTION Platforms that intermediate electronic content(without taking economic ownership of the intellectual property products they distribute),such as app stores Source:UNCTADIndirect taxation of e-commerce and digital tradeImplications for developing countries12E-commerce f

171、urthermore raises concerns regarding fairness in the tax treatment of different kinds of companies.It is imperative that the tax burden is equitable between e-commerce and traditional brick-and-mortar sellers,as well as between resident and non-resident sellers.In other words,fairness should be main

172、tained in both domestic and cross-border transactions.Virtual transactions between an infinite number of actors raise recording and traceability issues for tax control and audit.Third-party online marketplaces connect multiple buyers with multiple sellers,leading to a potentially very high number of

173、 bilateral remote transactions through a digital platform.11 This can complicate the assessment of tax liabilities and collection mechanisms since they may hinder the detection by tax administrations of taxable events and result in lost tax revenues(see Annex,Mawzo Tax Policy Research Centre).12E-co

174、mmerce can also raise issues related to the identification of(encrypted)transactions performed electronically,to determine where a product is produced or consumed,to distinguish between types of services,to identify transactions between consumers and overseas suppliers,and to collect the tax from mi

175、llions of end-users rather than a small number of intermediaries.Cross-border e-commerce may also involve digitally delivered services,confronting tax administrations with new situations regarding remote taxpayers domiciled beyond the countrys borders,without a permanent establishment(PE).1311Digita

176、l platform and online marketplaces will be used synonymously in the report.For a definition of online platforms,see OECD(2019):https:/www.oecd.org/innovation/an-introduction-to-online-plat-forms-and-their-role-in-the-digital-transformation-53e5f593-en.htm12It should be noted that many e-commerce tra

177、nsactions also take place though a sellers own website or app rather than through third-party online platforms intermediating transactions between multiple buyers and sellers.13The notion of permanent establishment is one of the most important issues in international tax law.The permanent establishm

178、ent concept determines both the tax jurisdiction(or“right to tax”)and the tax base for business profits of a non-resident enterprise.Doing business through digital platforms therefore requires regulatory adaptation.Existing tax systems are often not adapted to deal with e-commerce and digital trade.

179、Fiscally controlling and auditing online transactions are particularly challenging,especially when there is uncertainty concerning the nexus,or multiple nexuses,between jurisdiction,potential taxpayers and businesses.When parties in more than one country are involved in a transaction,the risk of non

180、-taxation or double taxation increases(Kabwe and Van Zyl,2021).Therefore,many governments need to create more enabling environments and strengthen the enforcement of the regulatory frameworks.The distinction between direct and indirect taxes may sometimes appear ambiguous or artificial,as illustrate

181、d by the following collection mechanisms or policy options:Reverse charge for VAT.The VAT reverse charge mechanism consists in shifting the payment of VAT from the supplier to the customer for B2B transactions,hence making the indirect taxation a direct one.This critical procedure for the indirect t

182、axation of e-commerce is further discussed later in the text.Many developing countries,especially in Africa,have a minimum tax on turnover at a low rate,varying from 0.5 to 2.5 per cent,making it similar to a sales(indirect)tax.More broadly,indirect taxes may represent the unique and second-best way

183、 to tax profits of digital firms.The Digital Services Tax introduced in the United Kingdom,France and Italy in 2020 took the form of a 2 to 3-per cent Indirect taxation of e-commerce and digital tradeImplications for developing countries13tax on turnover.14 A similar reasoning applies to transient o

184、ccupancy tax as an alternative to taxing directly the profit of digital platforms such as Airbnb,Booking or Vrbo(Fuchi,2024).Finally,some developing countries collect advance payment for income(direct)tax at the border on non-registered importers.Consumption taxes,including VAT are considered to off

185、er increased capacity for revenue mobilization,along with their perceived efficiency and neutrality.They are less distortive than capital and income 14These taxes generate controversies since they are deemed to target large U.S.multinational companies.The OECD Pillar 1 of GLOBE aims replacing these

186、unilateral initiatives and coordinating an effective taxation of these firms by establishing new nexus and profit allocation rules for large multinational enterprises.taxes,as they do not affect decisions to work or invest(Nguyen et al,2021).The potential simplicity of enacting a VAT may create addi

187、tional opportunities to generate tax revenue,especially when considering the pre-existing legal structures for VAT.This can make VAT a useful option for generating tax revenue in the digital economy,potentially enabling similar taxation treatment of both domestic and international sellers.In the nex

188、t section,particular attention is given the indirect taxation,and especially the use of VAT.VAT can be a useful option for generating tax revenue in the digital economy,treating domestic and international sellers equally ShutterstockIndirect taxation of e-commerce and digital tradeImplications for d

189、eveloping countries15B.Indirect taxation of e-commerce in developing countries:opportunities and challengesVAT is a major revenue source for over 170 countries,contributing over 30 per cent of total tax revenue and about a fifth of global tax revenues.Its particularly important for developing countr

190、ies,accounting for 4 per cent of GDP and over 7 per cent in developed economies.The efficiency and perceived neutrality of VAT have led to its widespread adoption.VAT is crucial for domestic revenue mobilization in developing countries,essential for financing sustainable development goals as tariff

191、revenues decline.However,indirect tax revenues remain low due to limited resources and high informality.Developing countries face challenges in balancing VAT thresholds to meet revenue goals while protecting consumers and considering domestic economic realities.Effective VAT implementation is needed

192、 to support development,governance,and public finances.Developing countries should optimize VAT thresholds and ensure clarity and enforcement to manage cross-border e-commerce,formalize businesses,and balance revenue collection with administrative costs.1.Why VAT is increasingly importantValue added

193、 tax is the most important indirect tax in terms of scope,collected revenue and spread in the world.Almost all countries levy a general consumption tax.In 2023,174 countries operated a VAT or GST system,and a growing number of jurisdictions have adapted or are considering adapting their VAT administ

194、ration to the challenges of digitalization(IMF,OECD,UNCTAD and World Bank 2023).As of July 2024,101 countries had enacted legislation on indirect taxes on transactions in the digital economy,and another 15 countries were in the process of introducing such taxes(KPMG,2024).Value added tax is neutral

195、and self-enforcing.The neutrality of VAT means that it does not favour any industrial organization or economic sector.By contrast,sales taxes involve a cascading effect that increases the total production cost of fragmented sectors and favour vertically integrated firms.From a neutrality perspective

196、,the VAT base should be as comprehensive as possible.VAT is also self-enforcing.The final consumer ultimately pays the VAT.While,by the successive deductions on VAT paid on their inputs,the firms along the supply chain provide information on the turnover of each supplier up to the final consumer.The

197、 main weakness of VAT is the risk of fraud at the last stage(B2C)and more generally for any transaction that involves a non-registered buyer/seller making a breach in the cascade sequence(informal operators,non-registered MSME,households).101 countries have enacted indirect tax laws on transactions

198、in the digital economy,with 15 more in progress Indirect taxation of e-commerce and digital tradeImplications for developing countries16The assumed VAT regressivity makes its administration more complex than for a sales tax.Equity concerns induce a quite complex VAT that is costlier to administer an

199、d increases the risk of tax frauds.Indirect taxation in general and VAT in particular are so-called“in rem”taxes,15 collected at the firm level without any consideration to individual characteristics,such as income or ability-to-pay,making VAT considered a regressive tax.As the propensity to consume

200、(the ratio of consumption to income)is higher for poorer households,the VAT burden falls relatively more heavily on poorer households.This social fairness consideration explains the design and implementation of multiple VAT reduced rates and of the exemptions of several goods or services to protect

201、the households with the lowest incomes.For instance,foodstuff,education and healthcare are VAT exempted in many developing countries.This does not mean that reduced VAT rates and exemptions systematically benefit the poorest households in developing countries.First,reduced rates may not fully transl

202、ate into lower consumer prices but into higher profits for retailers or manufacturers.Second,poor households in developing countries are often either mainly self-sufficient for their consumption(as small farmers)or they make purchases informally(Bachas et al.,2023).An alternative policy to VAT with

203、multiple rates and exemptions is to set a unique VAT rate with a large base and complement it by a cash transfer program to address poverty(Warwick et al.,2022).This requires,however,sufficient capacity to implement cash transfer targeting the poorest households(Thiel,2020).16A VAT follows the“desti

204、nation principle,”which means that goods and services are taxed in the country of destination or consumption,not in the country of origin or production.The same principle can be applied in the context of e-commerce.15An in rem tax is a tax on goods or services while an in personam tax is a tax on in

205、dividual income such as personal income tax.16Thiel(2020)analyses the cultural difficulties and institutional negotiations for the national adoption of individual biometric card.In the United States,for example,as the COVID-19 pandemic boosted online shopping,many states observed significantly incre

206、ased sales tax revenue.Some sales tax revenue also shifted from large urban retail centres to small rural jurisdiction where consumers reside(to the destination)(Agrawal and Shybalkina,2023).The destination principle suggests that exports should be zero rated and imports should be taxed,resulting in

207、 exporters being mostly VAT creditors(Ebrill et al.,2001,Cnossen,2019).This raises a second issue of VAT in developing countries:the failure of VAT credit refund mechanisms.Since the VAT rate on exportation is zero(which is different from an exemption as exporters are still declaring zero-rated sale

208、s),VAT liable exporters have the right to deduct the VAT paid on their inputs.They henceforth accumulate VAT credits on their local purchases and importations since they do not collect any VAT on their sales abroad.These credits should be reimbursed to guarantee the functioning of the VAT according

209、to its rationale.Unfortunately,developing countries often struggle to reimburse VAT credits.They usually deal with this issue by providing VAT exemptions to the main exporting firms.This solution narrows the VAT base and excludes large firms from the VAT network.Moreover,it favours importation over

210、local purchase when local suppliers are VAT liable and cannot collect VAT on their exempted customer.Therefore,local suppliers have to reduce their margin or increase their price(or both)to pass VAT paid on their inputs.The VAT exempted(exporting)firm will prefer to import rather than to buy locally

211、.VAT credit reimbursement has also been evidenced as an important source of VAT fraud.VAT registration thresholds define the size(in terms of turnover)over which firms are liable to pay VAT.Below the threshold,firms do not collect VAT on their sales and Indirect taxation of e-commerce and digital tr

212、adeImplications for developing countries17are therefore not allowed to deduct VAT on their inputs purchased.The threshold varies significantly across countries,from 0 to more than US$328,000 in Indonesia(See Table 1).A low threshold may reduce the VAT efficiency.There can be a trade-off between pote

213、ntial revenue collected and the collection costs involved(Ebrill et al.,2001).From the perspective of maximizing revenue collection and minimizing distortions in the market,the optimal VAT threshold would be zero.However,such a low threshold will involve significant administrative costs associated w

214、ith the collection of the taxes.Many countries therefore apply a positive threshold to reduce collection costs and secure tax revenue.Weak capacity of tax administrations may favor the use of a higher threshold,which in turn will imply a larger sector of VAT-exempted firms.The VAT threshold may in s

215、ome countries be considered an approximation to distinguish between formal and informal businesses i.e.,between registered and non-registered companies.VAT is then a powerful instrument to tax informal firms through backward linkages and imports(Keen,2008):formal firms registered for VAT charge VAT

216、on their sales while informal firms pay VAT on their inputs sold by formal firms that they cannot deduct later.This VAT payment can be seen as a tax on the informal sector similar to imports from informal firms paying VAT that cannot be deducted.Such mechanisms also provide an incentive for informal

217、 enterprises to formalize and to register for VAT.In this context,it is important to foster increased coherence among country approaches to reducing compliance costs and improving the effectiveness and quality of the compliance processes.Coherent and clear approaches can improve the ease of doing bu

218、siness.For tax and customs authorities,consistency is likely to support effective international cooperation among tax administrations and better enforcement.2.Indirect taxation opportunities and challenges in developing countriesIn 2015,the third International Conference on Financing for Development

219、 in Addis Ababa established that domestic revenue mobilization(DRM)would be the main financing instrument for the Sustainable Development Goals(SDGs).This objective was set following the observation that tax revenue to GDP remained relatively low in developing countries.Domestic revenue mobilization

220、 is also a response to the effects of trade liberalization,which has involved a significant decrease in tariff rates.The induced government revenue losses are hard to replace for developing countries by domestic tax revenue in a context of limited taxable base.The adoption of VAT and other indirect

221、taxes have become a key instrument to compensate for revenue losses in developing countries.In developed countries,VAT has largely replaced sales taxes.In developing countries,VAT adoption is part of the tax transition from revenue collection at the border to DRM.However,Arezki et al.(2021)emphasize

222、 that“tax transition,”that is,the rebalancing away from tariff revenues and taxes collected at the border towards domestic ones comprising direct and indirect taxes but dominated by VAT,remains incomplete in most developing countries.The rise of e-commerce and digital trade may challenge DRM in deve

223、loping countries,especially with regard to indirect taxation.Imports via e-commerce may reduce the tax base and tax revenues unless sales by foreign sellers are covered.If foreign sellers in B2C e-commerce lack a permanent establishment in the country of the consumer,they are difficult to tax direct

224、ly and indirectly.This is especially the case if appropriate national legislation has not been adopted in the destination country.Developing countries struggle with tax collection due to limited resourcesIndirect taxation of e-commerce and digital tradeImplications for developing countries18Table 1

225、provides an overview of indirect tax revenue,VAT liability thresholds and rates in selected developing countries and for different years.For the countries included,the ratio of tax revenue to GDP was on average 16.6 per cent.Low levels are observed in Somalia(3.2 per cent),Myanmar(7 per cent)and Nig

226、eria(7.9 per cent).By comparison,in OECD countries the average ratio was 34 per cent in 2022.17Country-specific estimates for VAT on digital products suggest that revenue gains are expected to grow gradually over time.A recent overview of experiences in different countries regarding VAT reforms aime

227、d at digital transactions indicates that,in the short run,annual revenue increases in developing economies range from approximately 0.03 per cent of GDP(such as in Chile and South Africa)to around 0.08 per cent(as seen in Thailand)(Hanappi et al.,2023).Nevertheless,these initial revenue gains are pr

228、ojected to expand over time due to indirect effects on compliance.This occurs as more information can be collected by expanding the reporting obligations of digital platforms(OECDWBGATAF 2023)and by investing in administrative capacity to enhance the capture of digitized transactions and improve bot

229、h coverage and compliance.Ultimately,beyond the immediate fiscal gains,an investment in a well-functioning 17See https:/www.oecd.org/tax/tax-policy/revenue-statistics-highlights-brochure.pdf.VAT system may yield long-term benefits in terms of efficiently increasing tax revenue.However,progress remai

230、ns uneven and revenue improvements have thus far failed to materialize for many developing countries.The effective collection of taxes often remains weak,and the adoption and deployment of new technologies have been uneven.Additional explanations refer to narrow tax bases due to aggressive tax plann

231、ing from multinational enterprises and multiple tax exemptions especially for indirect taxes(IMF,2011,Benitez et al.,2023).Low levels of tax revenue in many developing countries have been attributed to limited human,technological,and financial resources of tax administrations,as well as high levels

232、of informality in the economy(Besley and Persson,2014).Taxation is both a financing and a development matter.Equitable,fair and neutral taxation can be a driver for wider social and economic change.Taxation serves not only as a means to generate revenue and create the financial capacity necessary to

233、 support public policies,but also plays a vital role in laying the foundation for effective governance.Tax policy and tax administration reforms to secure fair and efficiently managed tax systems are essential to ensure the sustainability of public finances.Equitable taxation can drive social change

234、 and support effective governance Indirect taxation of e-commerce and digital tradeImplications for developing countries19Regional Trade AgreementYearTax revenue to GDP(%)Indirect tax(%)VAT(%)Excises(%)Tariff Duties(%)VAT liability threshold in local currencyin$Standard VAT rate(%)Reduced VAT rates(

235、%)ArmeniaCIS202025.512.97.521.1AMD 115 million232 394200BoliviaCELAC202025.212.76noNominal:13Effective:14.940Burkina FasoECOWAS201917.710.45.71.51.9FCFA 50 million83 334180CambodiaASEAN202020.22.1no100CameroonCEMAC201912.86.84.91.61.8FCFA 50 million83 33419.250ChadCEMAC201911.641.50.51.4FCFA 50 mill

236、ion83 334180,5China(Peoples Rep.)202016.310.35.61.70.3noCongo (Dem.Rep.)SADC20198.33.41.70.60.8CDF 80 million41 199160Congo(Rep.)CEMAC201926.35.62.20.31.4FCFA 60 million100 000180,5Cote dIvoireECOWAS201912.58.22.81.13.2FCFA 25 million for the supply of services;FCFA 50 million for the supply of good

237、s41 66783 334189Dominican RepublicCELAC202012.584.41.90.7VAT registration included in the general registration as a taxpayer1816,0EgyptMENAP202014.47.90.6EGP 500,000 31 086 140,5El SalvadorCELAC202018.9118.41.80.8no130Equatorial GuineaCEMAC201918.21.60.90.30.3noEthiopia201714.173.6ETB 1,000,00028 58

238、1150Georgia202022.312.89.23.30.2GEL 100,00032 705180HondurasCELAC202015.110.80.6no150India201620.611.51.81.7INR 40 million52 80012,180,5IndonesiaASEAN20209.55.72.91.10.2IDR 600 million328 289100JamaicaCELAC202026.216.48.83.52JMD 3 million21 14616,510,0KazakhstanCIS2020140.0030,000 times the monthly

239、calculation index211 000Kenya201916.38.43.92.41.5KES 5 million47 455148,0Table 1Indirect tax revenue in selected developing countries,VAT liability thresholds and rates,various yearsIndirect taxation of e-commerce and digital tradeImplications for developing countries20Regional Trade AgreementYearTa

240、x revenue to GDP(%)Indirect tax(%)VAT(%)Excises(%)Tariff Duties(%)VAT liability threshold in local currencyin$Standard VAT rate(%)Reduced VAT rates(%)KyrgyzstanCIS202017.416.66.62.9KGS 8 million106 698120MadagascarSADC201911.38.15.50.81.7MGA 200 million55 014200Malawi201912.46.43.51.81.1MWK 10 milli

241、on13 30716.50MaliECOWAS201916.2115.31.22.2FCFA 50 million83 334185,0Mauritania201918.18.64.403.5MRU 3 million79 000160MexicoCELAC202019.9159.93.20.9no168,0MoldovaCIS202021.29.95.92.12MDL 1.2 million65 754208,0Mongolia202032.123.916.65.60.7MNT 50 million14 39010MoroccoMENAP201926.412.97.42.60.8MAD 2

242、million(for wholesalers and retailers)210 579200,7,10,14MyanmarASEAN202074.80.5noNicaraguaCELAC202018.7115.83.30.5no150,7NigerECOWAS201910.77.43.60.51.7FCFA 50 million83 334190,5,10NigeriaECOWAS20207.91.40.800.6NGN 25 million71 3277.50PakistanMENAP2020106.80.51.3PKR 1.2 million7 55817,16,15,137.5,0P

243、eruCELAC202013.37.75.310.2no180PhilippinesASEAN202015.19.3PHP 3 million60 241125,0Rwanda202015.18.452.21.2RWF 20 million21 080180SenegalECOWAS202017.512.15.71.82.4no180,10Somalia20203.22.9002100South AfricaSADC202025.110.4620.8ZAR 1 million58 48018noTajikistanCIS202011.60.8TJS 1,000,00096 711185Thai

244、landASEAN202015.79.93.54.10.5THB 1.8 million58 81770TogoECOWAS201916.811.66.30.93.3FCFA 60 million100 00018noUzbekistanCIS202019.411.26.72.10.4UZS 1 billion99 917200VietnamASEAN2020159.64.71.4no100,5Average 16.69.45.11.71.483 19414.4Source:UNCTAD.Indirect taxation of e-commerce and digital tradeImpl

245、ications for developing countries213.Indirect taxation beyond VATIn most countries,some goods and services are not taxed under VAT,but under special(indirect)taxes.This is the case for gambling,insurance,banking,rental activity and sales of real estate.These activities are considered difficult to ta

246、x under VAT.Online gambling and lotteries are essentially B2C activities and typically taxed under a particular excise duty or equivalent.Box 2 describes the specific case of gambling,which is a major concern regarding the possibility of money laundering.Similarly,banking and insurance are often sub

247、ject to special taxes e.g.,in the form of a turnover or sales tax.Other areas,such as education or healthcare,are sometimes exempted from taxes.Box 2 The case of online gambling and lotteriesIndirect taxation of online gambling may raise significant revenue on a growing market especially in developi

248、ng countries.The global market reached a total of US$55 billion in 2023,and over the past three years,it has shown an average growth rate of nearly 50 per cent,reaching a maximum of 170 per cent in the United States.In the United Kingdom,annual turnover of online gambling was US$9.1 billion in 2023.

249、Since 2014,that country has imposed a 15 per cent Remote Gaming Duty on the gross profits generated from UK customers,irrespective of the operators geographical locations.These operators are required to register for operation and verify the tax residency of their customers in the UK.As of October 20

250、23,India has opted for a flat tax rate of 28 per cent on turnover for online gambling,casino activities,and horse race betting.In Brazil,Bill No.3,626/2023 regulates virtual betting,physical betting,real sports-themed events,online gaming and virtual online gaming.The Bill establishes a 12 per cent

251、tax rate on gross proceeds earned by sportsbooks and iGaming operators,whilst bettors will see their net winnings taxed at 15 per cent.Nevertheless,the regulatory landscape and taxation policies for online gambling largely remain uncertain or are absent in many jurisdictions.Online gambling,being su

252、sceptible to money laundering,presents a convenient avenue for illicit activities.For instance,a common tactic involves converting illegitimate funds into electronic balances in online casinos,engaging in minimal gambling,and subsequently withdrawing the funds in cash.Taxation plays a role in curbin

253、g such practices by facilitating the automatic recording of customer activities.In a broader context,digital taxation can contribute to minimizing illicit financial outflows from developing countries.Source:UNCTADIndirect taxation of e-commerce and digital tradeImplications for developing countries2

254、24.Cross-border specific rules:moratorium on electronic transmissions and de minimis rules on importsa.The WTO Moratorium on Electronic Transmissions18The Moratorium on Electronic Transmission(ET)exempts digital services from customs duties.In 1998,members of the World Trade Organization(WTO)adopted

255、 a two-year Moratorium stating that“Members will continue their current practice of not imposing customs duties on electronic transmissions.”At the end of 2023,88 Regional Trade Agreements(RTAs),involving a total of 87 economies,with 33 classified as developing economies,had incorporated further com

256、mitments to refrain from imposing customs duties on electronic transmissions(IMF,OECD,UN,WB,WTO,2023).At the 13th WTO Ministerial Conference(MC13),WTO members agreed to further extend the Moratorium of customs duties on e-commerce until the next Ministerial Conference(“MC14”)or 31 March 2026,whichev

257、er is earlier.19 The renewal of the moratorium also encompassed a call to revitalize the 1998 Work Programme on E-commerce over the next two years.The ministerial decision explicitly urges Members to“hold further discussions and examine additional empirical evidence on the scope,definition,and the i

258、mpact that a moratorium on customs duties on electronic transmissions might have on development,and how to level the playing field for developing and least-developed country Members to advance their digital industrialization.”Proponents of the moratorium emphasize that the commitment has supported a

259、 18See the Joint Report on Digital Trade for Development by the IMF,OECD,UNCTAD,World Bank and WTO available at:https:/unctad.org/system/files/official-document/dtd2023_e.pdf.19https:/docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN24/DEC.pdf&Open=True.stable and predictable environmen

260、t for digital trade to thrive.Meanwhile,other WTO members have expressed concerns about the lack of clarity regarding the scope of the moratorium and the definition of electronic transmissions as well as the opportunity costs of the moratorium.These include the potential foregone customs revenue and

261、 the desire to maintain policy space in light of the uncertainty associated with rapid technological change.They have also expressed concerns about the impact of the moratorium on their ability to use customs duties for industrial policy purposes(IMF,OECD,UN,WB,WTO,2023).The impact of the moratorium

262、 on government revenue has been estimated to be below 0.33 per cent of overall government revenue on average.The moratorium can impact the amount of customs revenue collected by governments.Uncertainties exist about its scope and the definition of electronic transmissions,but existing estimates of t

263、he potential revenue that could be collected using tariffs on electronic transmissions vary between 0.01 per cent and 0.33 per cent of overall government revenue on average for developing economies,with higher losses for a handful of economies.While tariffs and VAT are not mutually exclusive,recent

264、evidence shows that for most economies,VAT could generate higher revenue from taxing electronic transmissions with appropriate investment in the capacity of tax administrations.Tariffs on electronic transmissions might also impact competitiveness and participation of firms in trade(IMF,OECD,UN,WB,WT

265、O,2023).Beyond the issue of the Moratorium and related tariff revenue losses,there is a debate regarding the correct classification of some digital content as a good or a service.For example,should music or software on compact discs be considered as a good per se or as a service?There Indirect taxat

266、ion of e-commerce and digital tradeImplications for developing countries23is still no consensus among WTO members whether digitized products should fall under the General Agreement on Tariffs and Trade(GATT)or the General Agreement on Trade in Services(GATS)(IMF,OECD,UN,WB,WTO,2023).b.The de minimis

267、 rule on imports of goods The de minimis threshold defines the value above which duties and taxes,including custom duties and VAT/GST,are to be collected on imported goods,which may be the result of the increasing number of orders placed online.The initial purpose of such thresholds was to help gove

268、rnments and revenue authorities to concentrate their efforts and resources on the indirect tax base that yield the highest revenues.The World Customs Organization(WCO)Immediate Release Guidelines of 2018 defines the de minimis threshold as the minimum value of a good and/or minimum amount of duties

269、and taxes,established by national legislation,below which no duties and taxes will be collected.With this,other compliance considerations or charges such as VAT,environmental taxes,national health taxes,among others,which are often levied on imports as well as on domestic commerce,will need further

270、consideration.The WTO Trade Facilitation Agreement(TFA)article 7.8.2(d),on expedited shipment,takes the definition further by stipulating that“members shall,to the extent possible,provide for a de minimis shipment value or dutiable amount while preserving the right to examine,detain,seize,confiscate

271、 or refuse entry of goods,or to carry out post-clearance audits,including in connection with the use of risk management systems.”The TFA further asserts that internal taxes,such as VAT and excise taxes,applied to imports consistently with Article III of the GATT 1994,are not subject to this provisio

272、n.This leaves policy space for countries to decide which tax categories,charges and fees,as well as compliance procedures for which a de minimis threshold is defined(see Box 3).A number of business groups have argued for various amounts as ideal for a global de minimis threshold.The International Ch

273、amber of Commerce,for example,recommends a global de minimis threshold of US$1,000 and no less than US$200 to be applied to the value of goods.Given the heterogenous nature of economic structures and revenue drivers in different countries,however countries and customs unions need to individually exa

274、mine and determine de minimis thresholds that are most suitable.The WCO Cross-Border E-commerce Framework of Standards argues that when reviewing and/or adjusting de minimis thresholds for duties and/or taxes,governments should make fully informed decisions based on specific national circumstances.W

275、hile some countries may need to raise or reduce current de minimis thresholds,others may need to take a different approach to the application,implementation and enforcement of existing thresholds.For example,enforcement and compliance of existing de minimisthresholds is still a problem in many devel

276、oping countries.Simply resetting the threshold would not necessarily address the situation.Instead,governments may need to examine,reform,optimize and enforce the current de minimis regimes.Furthermore,most developing countries have not yet gotten around the multi-faceted and complex nature of taxat

277、ion related to cross-border e-commerce.Understanding the best point of application,the suitable bearer of tax liability and appropriate means of revenue collection are crucial issues to eventually optimize any tax regime for an e-commerce environment and most importantly for the success of any de mi

278、nimis regime.De minimis thresholds vary widely,reflecting each countrys policy priorities Indirect taxation of e-commerce and digital tradeImplications for developing countries24Box 3 Country experiences with de minimisCountries have different types,levels and thresholds of de minimis.Each countrys

279、regime reflects its trade,fiscal and monetary policy priorities.In developed countries,significant variation exists.While some countries implement a single de minimisthreshold,others implement multiple thresholds for different tax categories.Some countries exclude commercial transactions and apply t

280、he de minimis threshold only to certain types of transactions.The growth in e-commerce,both in volume and in number of“low-value”transactions,has transformed the landscape,raising concerns among governments over potential revenue losses and unfair advantages afforded to foreign suppliers.Some jurisd

281、ictions have found VAT relief for low-value consignments to be going against VAT neutrality,offering unfair competitive advantages to non-resident sellers(OECD,2015).Countries in the EU,for example,which implemented a common de minimis regime with a threshold of EUR 150(US$165)for customs duties lat

282、er implemented another de minimis threshold for VAT of EUR 22(US$24).This was primarily aimed at curbing revenue losses caused by e-commerce.Under the existing system,goods imported into the EU valued at less than EUR 22 by non-EU companies were exempt from VAT.This exemption was lifted in 2021,so t

283、hat VAT is now charged on all goods entering the EU).In many developing countries,policy discrepancies and implementation gaps remain common.While some developing countries apply de minimis for custom duties only,others do not have any de minimis at all.With the increasing ubiquity of e-commerce in

284、many emerging regions,optimal de minimis regimes will be needed to lessen the negative impact on public revenues.Countries with broad regimes that address multiple tax categories will,in particular,be able to achieve multiple policy goals and be more effective than those with a single or no de minim

285、is regime.The trade tax landscape is complex and multifaced,and many developing countries that lack the necessary technical capacity,tend to avoid de minimis regimes altogether.A comprehensive regime for all applicable taxes and duties,along with public awareness of these thresholds,can eliminate do

286、ubts,ambiguity,discretion and corruption,giving predictability and clarity to the tax environment.In Africa,many countries do not have a de minimis regime or apply very low thresholds.Certain countries,including Benin,Burundi,and Comoros,use informal arrangements on the ground instead of formal regu

287、lation.In Asia and the Pacific,economies generally have de minimis regimes,and thresholds range from under US$1 to more than US$1,000,with varying eligibility.For example,the threshold in Indonesia is US$3,whereas in Australia it is set at AU$100.Across Latin America and the Caribbean,the majority o

288、f thresholds fall within the range of US$50 to US$200.El Salvador,with the second highest threshold of US$300,established this value in November 2021,with a view to easing non-commercial online purchases.Meanwhile,certain countries,such as Saint Kitts and Nevis,along with Trinidad and Tobago,lack sp

289、ecific de minimis regimes.Source:UNCTAD.Indirect taxation of e-commerce and digital tradeImplications for developing countries25De minimis will become increasingly important as e-commerce evolves into a more common means of transacting across borders among businesses and consumers.Developing countri

290、es should therefore be encouraged to consider various policy mechanisms at their disposal,including de minimis to achieve these policy goals.When considering what de minimisapproach to adopt,developing countries may keep the following issues in mind:The regimes should be sufficiently well defined vi

291、s-vis all applicable taxes and duties along with public awareness to ultimately ensure predictability and clarity in the trading and tax environment.This could turn de minimis into a backstop to preserve government revenue and drive specific policy goals in the prevailing low-tariff trade environmen

292、t.Setting a threshold requires a multifaced,cross-cutting assessment that reflects the needs of all key stakeholders.Considering all relevant factors will make enforcement easier,compliance higher and lead to a more predictable trading environment.This also includes robust and solid economic modelli

293、ng of the impacts of implementing de minimis rules.Consider domestic realities,economic outlook,policy objectives and consumer policy regimes.The de minimis should be established and implemented as part of a clear understanding of the economic structure and characteristics of each country or REC.Dev

294、eloping country governments can use de minimis to take advantage of the growing sector of B2B e-commerce to promote exports,but also imports of intermediate goods that allow for further value addition domestically.This will encourage domestic SME participation in global value chains(GVCs).At the sam

295、e time,countries can use different thresholds for consumer goods,especially those that can be attained locally,to effectively protect small businesses from unfair international competition.Economic structures and revenue drivers of countries in customs unions can differ significantly and change over

296、 time.This should be reflected when determining a de minimis threshold in customs unions and RECs to ensure that it brings net benefits to all members.Capacity deficits persist in many developing countries regarding the handling of cross-border e-commerce.This has sometimes turned entry-exit points

297、into chokepoints.Countries need to address these capacity deficiencies by training customs authorities dealing with digitally traded goods,at airports in particular,to ensure the timely processing of parcels arriving by air.Implementation of de minimis rules and the simplification that such rules pr

298、ovide,will need to be considered in an overall coordinated national risk management context,not only in terms of revenue collection,but also in terms of compliance with other national regulatory priorities,such as health,safety and public moral issues.Thus,simplification of trade through application

299、 of de minimis provisions can be countered by the need for other control and compliance objectives.Developing countries could take into consideration six broad approaches in setting de minimis thresholds either applied individually or jointly depending on the public revenue goals,policy objectives o

300、r consumer welfare targets:Shipment-specific de minimisthreshold(Means of shipment/Type of consignment)A shipment-specific de minimis threshold is set either on the type of shipment or the means of shipment.For example,many countries have a de minimis regime that is applicable to only postal shipmen

301、t and eligibility is based on type of consignment.This is applied with the understanding that the means of shipment is a proxy for the value of the shipment,which can help ease burden of inspection,examination and customs procedures.Though simple,this approach can lead to undervaluation,Developing c

302、ountries could take into consideration six broad approaches in setting de minimisthresholdsIndirect taxation of e-commerce and digital tradeImplications for developing countries26misclassification,misdeclaration and fraud.The size and value of shipment can differ significantly,and a postal shipment

303、can be more valuable than a containerized shipment depending on the content.Hence,countries that choose this approach could complement it with further description that indicates eligibility with clear measures to curb fraud.For example,while Jamaica has a shipment-specific de minimis threshold that

304、applies to only personal shipment,the country has further described that some items,such as mobile phones,are ineligible.Tax-specific de minimis thresholdSome countries set de minimis for a specific tax category.While most countries have a primary de minimis rule for all import duties,a dozen countr

305、ies also have one or two additional thresholds specifically for VAT or other taxes.As noted above,the EU introduced new VAT rules for B2C transactions in 2021.As a result,all goods imported to the EU will be subject to VAT.The new rules aim to establish fair competition between European and foreign

306、e-commerce market players,as well as between e-commerce and traditional retail shops.They offer businesses a uniform system to declare and pay their VAT obligations from cross-border transactions to buyers in the EU via the new online system:Import One Stop Shop(IOSS),which simplifies the declaratio

307、n and payment of VAT for online sales of goods imported in the EU with a value not exceeding EUR 15,096.This type can boost public revenue especially from e-commerce,while the country maintains higher primary de minimis thresholds that eliminate burden of revenue collection and avoid retaliatory mea

308、sures from other trading partners.It may also help to create a level playing field between imports through e-commerce and domestic sales.There are two main reasons why this type of de minimis may be worth considering for developing countries.Developing countries have a multi-pronged policy interest

309、in opening up to the global economy.One is the protection of revenue and consumer welfare,and another is the protection of national trade,infant industries and small traders that provide jobs for the majority of their citizens.Revenues of developing countries can be significantly affected by increas

310、ed volumes of imported small parcels through e-commerce under de minimis regimes.Indeed,many developing country governments lack comprehensive monitoring mechanisms(digital or manual)to verify how many parcels cross their borders.Time or valuation-capped de minimis thresholdTime and duration-based t

311、hresholds apply to shipments based on a ceiling placed on the cumulative value of duty-free imports an individual or entity can clear under a specific de minimis regime.Beyond that threshold de minimis rule no longer applies and normal import duties are payable.It is usually applied together with a

312、primary de minimis threshold.For example,as Argentina and Uruguay have a general de minimis threshold for custom duties with a caveat that limits the number of shipments or cumulative value of shipment per year,per entity.This can be a public revenue protection safety net,which ensures that de minim

313、is regimes are not abused and extreme revenue losses are not incurred.It may,however,be difficult to ensure compliance in countries where identification systems are weak and/or where individuals trade under more than one identity.Country-of-origin specific de minimis thresholdCountry-specific de min

314、imis refers to setting a specific threshold for certain countries of origin under bilateral,regional or plurilateral trade agreements without violation of international trade law.This is implemented to promote certain policy goals,such as promotion of major exports through reciprocity from countries

315、 under a bilateral or plurilateral agreement.It could also be done for citizens welfare.For example,while the Republic of Korea has a threshold of US$110 applicable to a set of products from all markets,the country has an additional de minimis threshold of Indirect taxation of e-commerce and digital

316、 tradeImplications for developing countries27US$146 that only applies to products from the United States and Puerto Rico under the Korea-USA Free Trade Agreement.Product number and/or weight based de minimis thresholdMost countries use gross weight limits for shipments as a benchmark for setting de

317、minimis thresholds beyond which general duties apply.While gross weight can in some cases be a good proxy for value,countries understand that this is not always the case,so they apply weight limits as well as product type and number-based ceilings to prevent valuation flaws.Setting a multi-factor/cr

318、oss-cutting de minimis thresholdImplementing a threshold that meets all stakeholders needs can be challenging.E-retailers and importers may call for a high de minimis to cut down the cost of imports,while local SMEs and domestic retailers may count on the governments use of low de minimis to protect

319、 local businesses.Governments must take a multi-stakeholder approach to setting and implementing it.This does not mean that a specific de minimis is most ideal for all countries.Each country or REC,on its own merits,should consider their domestic realities,economic DNA,policy agenda and consumer wel

320、fare before setting a threshold.ShutterstockIndirect taxation of e-commerce and digital tradeImplications for developing countries29C.Indirect taxation of e-commerce:main opportunities,challenges and lessons learnedCountries have adapted their VAT systems to address challenges associated with cross-

321、border e-commerce.Measures include simplified VAT registration for non-resident vendors and using online platforms as VAT collectors for digital services.Digital platforms,which facilitate transactions and data sharing with tax authorities,are increasingly vital for tax collection and risk managemen

322、t.There is no universal approach to involving digital platforms in indirect taxation,with varying country-specific rules for VAT/GST liability on different types of goods and services.Both developed and developing countries have implemented regulations and introduced new technologies to tackle these

323、 challenges,emphasizing the need for better compliance enforcement and new monitoring tools.Collecting VAT through marketplaces and digital platforms can also help formalize enterprises in the informal sector,broadening VATs scope and addressing informal economy issues.1.Implementation trends relate

324、d to indirect taxation in the digital economy in developing countries:an overviewa.AfricaOut of the 54 developing countries in Africa,at least 17 have enacted indirect taxation legislation related to the digital economy.The Kenyan VAT(Digital Marketplace Supply)Regulations,2020,provide a simplified

325、VAT registration framework for non-resident entities that deliver digital services in Kenya on a B2C basis.Article 13 confirms that failure to collect and remit VAT could result in the denial of access to the digital marketplace.Nigerias Finance Act enacted in 2020 brings digital services applicable

326、 to VAT to digital transactions and realigns the legislative and administrative framework for VAT treatment of cross-border transactions.It is aligned with OECD recommended approaches,with the aim of reducing compliance and administrative burden,while blocking revenue leakage.Uganda has amended its

327、VAT statute to create an obligation for non-resident suppliers of digital services to file quarterly VAT returns(See Annex,Uganda Revenue Authority).In Zambia,the introduction of VAT on electronic services includes the supply of services via the Internet,mobile telecommunication networks and any oth

328、er e-commerce infrastructure.b.Asia and the PacificIn Asia and the Pacific,VAT has increasingly been introduced on e-commerce transactions for imported goods and Out of 54 African developing countries,at least 17 have enacted indirect taxation laws on the digital economy Indirect taxation of e-comme

329、rce and digital tradeImplications for developing countries30services.Out of the 13 Pacific Small Island Developing States(SIDS),two countries,Fiji and Nauru,have introduced taxes related to the digital economy(Mullins,2022).The Fiji Revenue and Customs Service has published a draft VAT bill,which,if

330、 approved,would introduce several changes,including the mandatory registration and VAT collection by non-resident providers of digital services to consumers in Fiji.20Out of the 45 developing countries in the Asian region,at least 24 countries have enacted indirect taxation legislation related to th

331、e digital economy.Cambodia has implemented VAT on e-commerce transactions.21 Viet Nam requires VAT on e-commerce and digital supplies to businesses and consumers for businesses without a permanent establishment.22Singapore expanded its GST from 2023 to apply to overseas suppliers of remote B2C servi

332、ces.Singapore is also introducing marketplace GST liability rules for low-value goods that removes the low-value goods exemption threshold.Malaysia extended its tax system to cover foreign supplies of digital services in 2020.Digital service providers are now obligated to collect and remit a 6 per c

333、ent VAT on digital services supplied to customers in Malaysia(B2C and B2B).Moreover,in 2023,the country implemented a sales tax on B2C imports of low-value goods(See Annex,Department,Inland Revenue Board of Malaysia).From 1 January 2024,Malaysia imposes a 10 per cent sales tax on all low-value goods(LVG)imported into the country for B2C transactions.Technological advancements are also being observ