The reports and recommendations are part of the OECD’s work on implementing the Taxation Framework Conditions for e-commerce agreed on by OECD ministers in Ottawa in 1998. A key element of the work programme has been an international dialogue, involving not only OECD member countries but also the international business community and a number of non-member economies.

The reports from the OECD Committee on Fiscal Affairs and business/government advisory groups it has set up cover three main areas: direct taxation, consumption taxes and tax administration. On income tax, OECD countries have reached a broad consensus on the interpretation of existing permanent establishment rules, fundamental for deciding where profits on e-commerce can be taxed, and are working to clarify tax treaty treatment of various types of e-commerce payments.

OECD countries have also made significant progress towards identifying pragmatic ways of achieving effective taxation in the place of consumption. They have reached agreement on the main administrative challenges and opportunities facing tax administrations and on the sort of responses that governments need to consider. The OECD is inviting public comment on the proposals for consumption taxes and tax administration.

“There is much that tax administrations can and should do to share their experience and expertise internationally, especially in the field of taxpayer service,” Gabriel Makhlouf, chairman of the Committee on Fiscal Affairs, said after a meeting in February. “It is important that we maintain our efforts to strengthen the emerging international consensus, so as to provide governments and business with the certainty that they need about how taxation rules should apply to e-commerce.”

Note: The OECD is publishing a progress report on implementing the Framework Conditions in May 2001.

©OECD Observer No 225, March 2001