A Study Of The Impact Of Cross-border E-commerce On Tax Jurisdiction

With the development of information technology,cross-border e-commerce emerged and has gradually become an important global business model.According to “Digital Globalization: The New Era of Global Flows” published by Mc Kinsey Global Institute in March 2016,approximately 12 percent of the global goods trade is conducted via international e?commerce.What's more,cross-border e-commerce has also become an important driving force for China's economic development.According to the statistics from China E-business Research Center,the transaction scale of China's cross-border e-commerce in 2018 reached 9 trillion yuan,accounting for 29.5 percent of total volume of merchandise imports and exports.In addition to economic benefits,cross-border e-commerce has also brought social value such as improving consumer welfare,perfecting telecommunications networks,promoting entrepreneurship and innovation and so on.However,while bringing economic benefits and social value,cross-border e-commerce has changed economic activities mode,which has brought a great impact on the tax jurisdiction based on traditional economic model.In order to deal with the negative impacts of cross-border e-commerce on tax jurisdiction,international community has actively carried out studies.Nevertheless,most proposals are still in the theoretical stage,such as “bit tax”,“virtual permanent establishment” and so on.Even if some proposals have already been put into practice,such as EU's e-commerce value-added tax and digital services tax,they have failed to reach global consensus.At the same time,China's e-commerce started relatively late and tax policies in cross-border e-commerce are still in a relatively blank stage.It is bad for China,the net importer of cross-border e-commerce transactions,to safeguard tax sovereignty and economic interests of domestic enterprises.Hence,this paper adopts literature review method and comparative study method to conduct research on the relationship between cross-border e-commerce and tax jurisdiction and give suggestions.To begin with,take Amazon,the American cross-border e-commerce giant,as a pointcut to analyze in detail the impacts of cross-border e-commerce on tax jurisdiction.Thereinto,the effects on territorial jurisdiction include unclear classification of income nature and the difficulty in determining permanent establishment;the effects on resident jurisdiction include the conflict in the identification standards of resident legal person and the difficulty in applying management organization standard.Next,summarize the different proposals from international community to solve the tax jurisdiction problems resulted from cross-border e-commerce.Thereinto,OECD has provided many ideas for revising the asserting regulations of permanent establishment including adding the commentary related to e-commerce on permanent establishment,revising the exception clauses of permanent establishment and expanding the connotation and denotation of permanent establishment;EU and its member states have put forward the solutions in intermediate links including e-commerce value-added tax and digital services tax;the United States has expressed opinions from its own interests including emphasizing the importance of resident jurisdiction in terms of income tax and advocating the realization of globally tariff-free for cross-border e-commerce in intermediate links.Then,starting from Amazon,the American cross-border e-commerce giant,to analyze in detail about the applicability of the proposals from international community.Thereinto,the ideas put forward by OECD of revising the exception clauses of permanent establishment and expanding the connotation and denotation of permanent establishment and the solution suggested by EU and its member states of e-commerce value-added tax have good applicability and are worth using for reference by China.Finally,based on China's national conditions and the applicability analysis of the proposals from international community,some reasonable suggestions are put forward to deal with the impacts of cross-border e-commerce on China's tax jurisdiction in this paper including tax guidelines,the ideas to perfect China's tax jurisdiction rules and the ways to improve tax collection and management and strengthen international cooperation.To sum up,with the increasing importance of cross-border e-commerce in China's and global economy,relevant tax jurisdiction issues have become more and more obvious.Unclear classification of income nature,the difficulty in determining permanent establishment,the conflict in the identification standards of resident legal person and the difficulty in applying management organization standard have seriously affected the effective exercise of tax jurisdiction and infringed upon China's sovereignty in tax area.In this regard,the Chinese government needs to adjust tax policies timely in order to better deal with the impacts of cross-border e-commerce on tax jurisdiction.Therefore,this paper holds that,first,it is necessary to formulate reasonable tax guidelines to guide the ideological direction of tax policy modification,including adhering to the principle of national tax sovereignty,the principle of tax neutrality,and the principle of tax flexibility;second,it is necessary to perfect China's tax jurisdiction rules to adapt to the operation characteristics under the cross-border e-commerce environment and safeguard the tax sovereignty of China,the net importer of cross-border e-commerce,including adhering to the priority of territorial jurisdiction,revising the asserting regulations of permanent establishment and studying the new classification standards of the nature of cross-border e-commerce income;third,it is necessary to perfect supporting measures to assist to revise and implement related policies including raising tax collection and administration level and strengthening international cooperation.