Implications Of Consumption Tax On Developing Countries

Surfacing of electronic commerce over the past decade has drastically altered the economic landscape, even for developing countries. This digital revolution offers unprecedented opportunities for economic growth and development for developing countries, however, the imposition of consumption tax on developing countries is different than in most developed countries. Perhaps, this is because, most of the developing countries rely upon consumption taxes for their government budgets. As such, the developing countries will probably be net importers of e-commerce in the medium term. Consequently, they will not be interested in grinding down their tax bases by swapping to an origin-based tax system. However, they need to be conscious of the fact that the tax collection on e-commerce activities will be access to the latest technologies by tax authorities. Therefore, developing countries need to catch up on modernizing their tax administration systems in order not to lose important tax revenues on the collection of consumption taxes.

The following questions have been addressed in this article:

What countries were included in UNCTAD survey which was done for the purpose of the status of electronic commerce in those countries?
Do you think by adopting e-commerce policies may now place the LDC in a better position to use international trade as a tool for development rather than the policies which were used in the past?
What were some of the potential niches for e-commerce in these LDC countries?


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