History and management of tax and tax system--paper代写范文

51Due论文代写平台paper代写范文:“History and management of tax and tax system”，这篇论文主要描述的是税收制度的发展有着非常悠久的历史，是历史和社会发展的产物，也是氏族社会向奴隶社会演变的产物，税收就像动力般推动着社会和社会管理阶层的前进，税收制度的改革也跟随着时代的变化而不断的发展和完善。

Tax and taxation systems have been in existence way beyond the limits of memory. It has been the driving force in developments historically, socially and administratively throughout organized societies. In present day UK, as with all intricate economic systems, the fundamental significance of taxation can be seen from its absolute and glaring result. [1] As our society continues to grow, there is a swift move from the usual traditional economy system to one based more on digitized information. The value added through this digitized method has become increasingly intercontinental in most financial systems. However, by way of contrast to the swift move, tax laws which are based on principles that evolved decades ago and relates primarily to tax transactions involving tangible products within a single jurisdiction is yet to step up to the game to meet up with evolving technology. This tax issue seems unavoidable with new technology [2] .

The rise of electronic commerce raises fundamental questions of tax policy. There are clear commercial fears that e-commerce may be held back by unclear and obsolete tax laws, particularly if double taxation augments, as tax authorities struggle to carry out their duties effectively to tax a novel profit source. Taxing authorities are worried that existing tax laws will not be able to capture electronic transactions properly, thereby reducing the tax base. Also, with the rise of sophisticated means of communications which opened up the market front from the traditional mode to an electronic business in turn connotes that theoretically speaking, there will be less difficulty for businesses to move across form one jurisdiction to another, in search of more favorable and conducive tax rates. The spheres mostly affected by tax base erosion in the short term are products that are easily digitized and easily grasped through the electronic media: books, music, travel arrangements, software and information supply, banking and financial services etc [3] .

Our current tax systems were built to operate in a (more) physical environment in which most transactions are documented in writing at the place where taxable transactions occur or taxable income arises. These vital transaction features cannot be presumed in this new environment; the flexibility and adaptability of tax systems to these changed circumstances becomes even more important therefore than usually the case. There is also the potential for transactions to be hidden. E-commerce encompasses not only the internet, but also the transactions conducted on private networks. Even on the internet, the large size of online activity could make discovery of transactions very complex. The efficacy of a tax system depends eventually on the assent of taxpayers to be taxed. The collection of tax is based on the intentional disclosure of information by individuals and businesses to the tax authorities. The process is controlled by authorities who have been given the powers to persuade and enforce observance.

The government is committed to ensuring that taxation is not a barrier to the growth of e-commerce but rather foster a climate in which e-commerce can grow. At the same time tax revenues must remain secure so that public services can be properly funded.

It is worthy of note that, there no separate tax laws that apply to e-commerce. Taxpayers and taxing authorities are both required to apply the general principles of tax law to e-commerce. Most assuredly, the electronic highway will affect and be affected by tax systems. In order to develop suitable tax systems to operate in this area, the influences need to be understood and appreciated in order to develop suitable tax systems to operate in this new environment.

This dissertation will look at the key issues and pinch point where those general rules are ill-suited to e-commerce and vice versa. This dissertation will also focus on the application of direct and indirect tax systems to electronic commerce, the concept of permanent establishment. It will also explore the concerns of some tax authorities that current tax principles and rules may not be equipped to deal with challenges posed by doing business over the internet (often referred to as cyberspace) a hazy realm without boundaries.

THE ROLE OF OCED ON TAXATION

Among the plethora of books, articles, papers, reports produced on this topic, the work of OECD stands out as the most significant, given its commitment to consulting broadly with governments worldwide as well as with business communities to develop an integrated and comprehensive approach to taxation of e-commerce [4]

The OCED from its creation in 1961 has had a recognized role and status as an agency for promoting the liberalization of cross-border transaction. This is explicitly set out in Article 1 of the convention that set up the agency, in which among other things enjoined it to ‘contribute to the expansion of the world trade on a multilateral non-discriminatory basis in accordance with its obligations’ While OECD does not really offer financial support to Member Countries, and has no power per say to instruct member governments, it can influence thinking and even policies. One aspect of its work which serves as an ongoingprocess is its influence on activity known as multilateral surveillance [5] in which governments analytically review each other’s strategies and conduct within specified areas of plan.

The spectacular boost of cross-border trade and investments has raised an increasing number of international taxation issues. As economic activities involve more and more countries, problems involving the relations of national tax systems have also increased. Existing tax rules which were formed in a more closed economic atmosphere can discourage international activity. They can bring about discrepancy between countries as the appropriate tax treatment of an international business and between tax payers and governments. Unresolved international tax disputes can undermine cooperation and discourage investment and so become a serious impediment to global development. [6] As an organization of developed countries whose purpose is to expand world trade and maintain stability. The functions of these treaties are to avoid double taxation on the same income and to determine which country has the right to tax income of particular types and particular origin. Double taxation treaties also provide for the exchange of information between revenue bodies and mutual assistance in collecting tax. [7]

The Fiscal Committee of the Organisation for European Economic Co-operation (OEEC), which later became the OECD, published a draft instalment of how a model treaty on international taxation might look. The global economy was starting to become more integrated in the 1950s and the intention was to assist businesses and governments by helping to avoid double taxation and to prevent tax evasion. The question to resolve was straightforward enough: how would governments claim their rightful taxation from mounting international businesses, while not leaving corporations worried about being unfairly taxed across the different jurisdictions in which they operate? Today there are more than 3,000 tax treaties in force around the world based on the OECD model [8] .

Quite simply, the OECD model has ascertained itself as the means of resolving the most widespread problems that arise in the field of international taxation. By facilitating a certain harmonisation of double tax treaties, it steers bilateral negotiations and helps settle disputes on a uniform basis. Considering a hypothetical example on double taxation, if a US company sells its products in the US and derives income from this activity, it will pay taxes in the US. If the same company sells its products also in France, it may well have to pay tax on the same income both in France and in the US. But how much tax should the company pay and to which tax authority? The detrimental effects of getting this double taxation wrong on international trade, investment and confidence are self-evident. Clearly, neither business nor government wants to be out of pocket or feel discouraged or discriminated against. Double tax treaties help resolve these conundrums by providing agreed rules for allocating taxing rights on cross-border income between the two countries, so that the US company is free from double taxation on its income [9] .

The OECD Model Tax Convention helps resolve such problems, though it is not binding by law. Rather, the OECD issues a recommendation based on the common position of its members, who in turn commit to follow the model and its commentaries, while taking on board its reservations, when concluding or revising bilateral tax treaties. The extensive and regularly updated explanations that accompany the model provide guidance on the acknowledged interpretations of the main text and have come to serve as a very useful reference to taxpayers, tax administrations and the courts, whether in OECD member countries or elsewhere around the world’ [10] .

BILATERAL TREATY [11]

Bilateral agreements sprung into being as a result of past occurrences which revealed that independent measures may perhaps not be adequate to lessen the burdens of double taxation. This shortfall stems from the multiplicity of tax systems, which in turn originates from differences among countries in legal and tax records, financial policy, revenue needs and the level of compliance and enforcement. These distinctions are reflected in the way that a country takes the support of foreign venture, the categorization and working out of taxable income and the diverse techniques used for apportioning income to domestic and foreign origin. Due to increasing intricacies of tax systems and the array of taxes levied, it has become more and more difficult to make provision for a fully efficient easement from international double taxation through the unilateral approach [12] .

The wrapping up of bilateral tax treaties for the avoidance double taxation came into view since 1960s as an outstanding characteristic of inter-State economic relations. As of fact, double tax conventions are now the recognized ways for States to be in one accord at the international level on the decision of double taxation predicaments that arise in imposing personal and corporate income taxes on cross-border activities of their people and nationals. Every convention is a negotiation between the domestic laws of contracting States that are parties to the convention. These negotiation and compromises undertaken by the States have come to take paradigm forms. The OECD Model treaty has been the back bone for practically all tax treaties between developed countries. It was initially published in a draft form in 1963 and finally published as the OECD Model Double Taxation Convention on Income and on Capital in 1977. [13] However, most double tax conventions are quiet about how contracting States will proffer efficacy to them. This is left as an issue for the domestic (constitutional) law of each state.

Bilateral tax treaties resolves many double taxation problems by reconciling the differences in various types of income and their geographical source, ascertaining a widespread method of determining how certain incomes shall be classified and taxed, and either assigning exclusive tax jurisdiction over certain items of income to one of the treaty countries or dividing the tax revenue between the two countries when neither is willing to forego its claim entirely. Tax treaties, thus authorizes a degree of mutual space that is not possible under the much less supple statutory methods applied to businesses with countries in general [14] .

Bilateral treaties have been debated upon in the light of varying, financial, social and other policies which are vital to the parties involved. The wrapping up of a treaty between two developed countries is facilitated by them been in almost similar levels of development, so that the reciprocal flows of trade, investment and hence the respective gain or loss of revenue to the parties from reducing taxes would be relatively equal in size.

Most countries have entered into bilateral agreements with respect to taxes. A clear example is the UK/USA Double Taxation Agreement. This treaty like many others tries to eliminate double taxation of income for UK and US inhabitants, it also protects the inhabitants form fiscal discrimination, it provides them with forgone conclusion about the tax treatment of income and gains and to prevent tax evasion and avoidance. The treaty also guarantees that benefits go to those UK and US residents that are due and entitled to it. This treaty is firmly founded on the OECD Model Tax Convention [15]

It is a known fact that the reduction of double taxation, elimination of tax evasion and encouraging cross-border trade efficiency are some of the basis for entering into treaties. [16] It is generally accepted that tax treaties improve certainty for tax payers and tax administration in their international dealings.

MULTILATERAL TREATY [17]

Multilateral agreement which has to do with agreements between three (3) or more parties concerning the terms of a specific circumstance are often the result of recognition of common ground between the various parties involved concerning the issue at hand. Multilateral agreement differs from bilateral agreements, in that bilateral agreements occur between two (2) parties only. Bilateral and multilateral agreements can sometimes conflict with one another, particularly when the provisions of a multilateral agreement amend or invalidate the terms of a very old bilateral agreement [18] .

The work on multilateral agreement has since begun by the OECD in the area of avoiding international double taxation among member countries. This is evident by member countries in their collective and multilateral support of how international double taxation should be avoided by conceding to the OECD Model Tax Convention. [19]

Efforts have been made to digress from a bilateral regime to one more of a multilateral scheme. The multilateral agreements have by and large followed the patterns of bilateral double tax conventions and to some level, a modus operandi for achieving uniform bilateral agreements between members of the participating group. The agreements between parties are usually comprehensive in nature and it seeks to avoid income or profit from being taxed twice international economic front. Another reason for going into such agreement is to encourage foreign investment.

The acts and deeds of one nation could have bearing effects on another more than ever as a result of globalization. Multilateral agreements have become one of the important ways of settling vital issues among nations in a way that launches a foundation of common view and determines actual and probable points of differences. Multilateral agreements often require complex dialogues which are essential in resolving the distinctions between the parties and bringing them together in one accord.

The conventional concept of bilateral tax treaties is at present an issue in view of the way the economic environment is fast developing. The very nature of the economic market seems to call for a combined instrument which will suit the growing multilateral economic relations. Some experts in this field have questioned bilateral treaties, on whether they are still the most efficient instrument for dealing with the new complexity and whether a multilateral treaty would not be more satisfactory solution [20] . In 1992 the Ruding Report stated that it would be a possibility to surmount the issues of discrimination and distortions by reaching an agreement on multilateral tax treaty between Member States either in the framework of the Treaty of Rome or in a special convention. On the other hand, these issues may also be solved by some form of corresponding action between Member States and the Commission [21] . A multilateral treaty will make it possible to address problems that are inexplicable under the scheme of bilateral agreements. It will lessen the complexities of business and introduce enhanced legal certainty [22] particularly if the Member States agree to give binding powers. There are already a good number of examples of a multilateral treaty. [23] In 1983, the European Union Nordic countries (Finland, Sweden and Denmark) signed a multilateral double taxation agreement [24] with other members of the Nordic Council (Iceland and Norway) which substituted the previous bilateral treaties.

The Nordic Convention is a classic example of a multilateral treaty between a group of countries that are members of theThe conventional concept of bilateral tax treaties is at present an issue in view of the way the economic environment is fast developing. The very nature of the economic market seems to call for a combined instrument which will suit the growing multilateral economic relations. Some experts in this field have questioned bilateral treaties, on whether they are still the most efficient instrument for dealing with the new complexity and whether a multilateral treaty would not be more satisfactory solution [20] . In 1992 the Ruding Report stated that it would be a possibility to surmount the issues of discrimination and distortions by reaching an agreement on multilateral tax treaty betweenMember States either in the framework of the Treaty of Rome or in a special convention. On the other hand, these issues may also be solved by some form of corresponding action between Member States and the Commission [21] . A multilateral treaty will make it possible to address problems that are inexplicable under the scheme of bilateral agreements. It will lessen the complexities of business and introduce enhanced legal certainty [22] particularly if the Member States agree to give binding powers. There are already a good number of examples of a multilateral treaty. [23] In 1983, the European Union Nordic countries (Finland, Sweden and Denmark) signed a multilateral double taxation agreement [24] with other members of the Nordic Council (Iceland and Norway) which substituted the previous bilateral treaties. The Nordic Convention is a classic example of a multilateral treaty between a group of countries that are members of the OECD and some of the EU. This follows strongly the provisions of the current OECD Tax Model Convention [25]

Several countries have cross the threshold into multilateral agreements with the aim to assist in coordinating their tax policies and foster regional economic development. All of these agreements which subsist throughout the world follow an internationally accepted format which is prescribed by the OECD. The US Model Income Tax Convention which was concluded in 1996 forms the starting point of all US double taxation agreements. Just like any other tax agreement, its aim and objectives includes elimination of international tax avoidance by prescribing rules for allocation of information and deductions between related parties for the exchange of information and for the assistance in collection, it also seek to alleviate international double taxation and provides procedural rules for the resolution of objectives and inconsistencies [26] . In UK, Section 788 of the Income and Corporation Taxes Act 1998 gives legislative effects to any arrangement made with other countries that provide for relief for double taxation, which will include double taxation agreements negotiated by UK

DEFINITIONS OF BASIC CONCEPTS

A starting point for such a study is the word itself. The electronic world has been given a number of names-‘ the information superhighway’, ‘cyberspace’, ‘the internet’, etc. these all refer to a non-physical or virtual space created through the use of technology in which participants can interact with each other. This allows for the creation of a virtual world in which people in different physical locations can meet up and do businesses with each other [27] .

Electronic Data Interchange (EDI) is the earliest manifestation of what is known as e-commerce. Dating from the mid-1960s, the beginning of EDI is seen in the clearing system for banks and in airline passenger reservation system. Various definition of EDI has been used over time, with the UNCITRAL Model Law on Electronic Commerce providing the most widely acceptable. It considers it to be the electronic transfer from computer to computer of information using an agreed standard to structure the information. [28]

Electronic commerce is an important part of the growth of the internet. As the name connotes, electronic commerce refers to a wide array of commercial activities carried out through the use of computers, including on-line trading of goods and services, electronic funds transfer, on-line trading of financial instruments, electronic data exchanges between companies and electronic data exchange within a company over the internet (which is referred to as information high way). This method is a sharp contrast with the traditional method of transaction which was/is done over the counter and face to face with the parties involved.

The US Department of Commerce defines it as any transaction conducted over the internet or through internet access, comprising the sale, lease, license, offer or delivery of property, goods, services or information, whether or not for consideration and including the provision of internet access. [29]

Tax on the other hand refers to monetary charge imposed by the government on persons, entities, transaction or property to yield public revenue. [30] Tax systems operate on some basic principles on which a government is meant to be guided in designing and implementing an equitable tax regime. These include;

Adequacy- which means that taxes should be just enough to generate revenue required for the provision of essential public service.

Broad basing- taxes should be spread over as wide as possible across the population or sectors of the economy to minimize the individual tax burden.

Compatibility- here, taxes should be coordinated to ensure tax neutrality and overall objectives of good governance.

Convenience- taxes should be enforced in a manner that facilitates voluntary compliance to the maximum extent possible.

Earmarking- this simply means that tax revenue from a specific source should be dedicated to a specific purpose only when there is a direct cost and benefit linked between the tax and the expenditure, such as the use of motor fuel tax for road maintenance.

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