Offshore E-commerce And Transaction TaxesOffshore e-commerce represents a challenge for the application of transaction taxes (i.e.: sales tax and Value Added Tax.); particularly, when dealing with digital products. Notably, all Western nations are struggling to find out how transaction taxes can be levied on the sale of digital products over the Internet. Some guidelines have been implemented by the European Union and its member states. U.S. Federal and State tax authorities have also provided some guidelines as to taxation of digital products sold over the Internet.
The following questions have been addressed in this article:What are transaction taxes?
How are transactions taxes levied?
What is the challenge posed by e-commerce and how is it addressed?
How does it work for digital products?
What consequences for offshore e-businesses?