- Foreign registration does occur and sometimes comes about from a combination of carrots and sticks; then there is the alternative of registering a foreign sales subsidiary, like Amazon does for example in Canada.
- Treaty of 18 April 1951, establishing the ECSC, 261 UNTS 140, entered into force as of 23 July 1952.
- Treaty of 25 March 1957, establishing the EEC, 294–297 UNTS 17, entered into force as of 1 January 1958.
- Treaty of 25 March 1957, establishing Euratom.
- Treaty of Lisbon of 13 December 2007 [2007] OJ C306/1.
- 6 In this section, because it offers a historical perspective, we refer to the articles in the original text of the treaty. Since its implementation, the treaty has been amended several times and the text of articles and the enumeration of the articles have been altered.
- 7 See Art 2 EEC.
- See Art 99 EEC. Harmonisation of direct taxes is not explicitly mandated but based on Art 94 EEC, which limits the purpose and scope to ‘approximation of [laws that] directly affect the establishment or functioning of the common market’. For a more extensive treatise on EU tax law and harmonisation see, for example, Paul Farmer and Richard Lyal, EC Tax Law (Oxford University Press, 2nd edn 2010); Ben JM Terra and Peter J Wattel, European Tax Law (Wolters Kluwer, 6th edn 2012); and, with an exclusive focus on direct tax, Ruth Mason, Primer on Direct Taxation in the European Union (Thomson Westlaw, 2005).
- Directive 67/227/EEC of 11 April 1967, OJ, 14 April 1967, No 71/1301.
- Directive 67/228/EEC of 11 April 1967, OJ, 14 April 1967, No 71/1303.
- Council Decision 70/243/EEC of 21 April 1970, OJ, 28 April 1970, No L94/19. The principle of own resources for the communities was laid down in Art 201 of the EEC Treaty. Direct contributions were agreed on for a transitional but undefined period.
- Directive 77/388/EEC, OJ, 13 June 1977, No L145.
- ‘The Completion of the Internal Market’, White Paper by the European Commission to the European Council, COM(85) 310.
- Directive 91/680/EEC of 16 December 1991, OJ, 31 December 1991, No L376.
- Directive 2006/112 of 28 November 2006 on the common system of VAT [2006] OJ L347.
- The temporary character of the interstate trade tax rules and the future system based on origin are stated in Art 402 of Directive 2006/112.
- Directive 2008/8/EC of 12 February 2008 [2008] OJ L44/11–22.
- European Commission, Green Paper on the Future of VAT, ‘Towards a Simpler, More Robust and Efficient VAT System’, COM(2010) 695 final, para 4.1.
- See European Commission, 6 December 2011, ‘Future VAT System: Pro-Business, Pro-Growth’, Press Release IP/11/1508.
- Green Paper (n 18) para 4.2.3.
- Art 32 of Directive 2006/112. Or, if the goods arrive from outside the EU, in the country of importation.
- See Art 138 in conjunction with Art 169(b) of Directive 2006/112.
- Art 40 of Directive 2006/112. For a definition of intra-Community acquisition, see Art 20.
- Art 94 of Directive 2006/112.
- Art 200 of Directive 2006/112.
- For the scope of the input-VAT deduction, see Arts 168, 169 and 170 of Directive 2006/112; for the proportional formula calculation, see Arts 173, 174 and 175.
- On identification, see Arts 213–16 of Directive 2006/112. See also Art 31 of Council Regulation (EC) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax [2010] OJ L268/1.
- Art 226(3) and (4) of Directive 2006/112.
- Art 226(11) of Directive 2006/112.
- See Arts 262–4 of Directive 2006/112.
- The exchange is mandated and will take place electronically on the basis of Regulation 143/2008 of 12 February 2008 [2008] OJ L44/1–6, amending Regulation 1798/2003.
- Some estimates place the cost of VAT fraud within the EU alone at USD 340 billion per annum: John Norregaard and Tehmina S Khan, ‘Tax Policy: Recent Trends and Coming Challenges', Working Paper 274, International Monetary Fund (2007), 39. According to PricewaterhouseCoopers, Shifting the Balance from Direct to Indirect Tax (2011) 15, an estimated 11% of VAT revenue is lost annually through fraud, which equates to around Euro 100 billion: www.pwc.com/gx/en/tax/indirect-taxes/shifting-balance.jhtml. All websites accessed 1 March 2013.
- See, on this subject, Robert F van Brederode, ‘Third Party Risks and Liabilities in Case of VAT Fraud in the EU’ (2008) 1 International Tax Journal 31.
- The trade tends to be in high-value, low-volume consumer goods, such as mobile phones, computer components and other electronics.
- For specific technology-driven solutions to mitigate fraud, see Richard T Ainsworth, ‘VAT Fraud and Technological Solutions’ in Tax Analysts, The VAT Reader: What a Federal Consumption Tax Would Mean for America (Tax Analysts, 2011) 204.
- See Robert F van Brederode, Systems of General Sales Taxation: Theory, Policy, and Practice, Series on International Taxation 33 (Wolters Kluwer, 2009) ch 9, 231.
- Art 33 of Directive 2006/112.
- Art 34(1)(b) and (c) of Directive 2006/112. The threshold is either Euro 100,000 or Euro 35,000, to be determined by the Member States; see Art 34(1) and (2).
- Art 34(4) of Directive 2006/112.
- Art 53 of Directive 2006/112.
- Art 47 of Directive 2006/112.
- However, the particular tax jurisdiction rules for B2B supply of services and Intra-Community acquisitions are not identical and may in some cases lead to different results.
- Art 44 of Directive 2006/112.
- Art 196 of Directive 2006/112.
- Although this treatment may seem theoretically complete, in reality there are many practical hurdles and obstacles, especially in the areas of verification of business status, customer location, the determination of a fixed establishment, and commercial objections and implications. See Marie Lamensch, ‘Are “Reverse Charging” and the “One-Stop-Scheme” Efficient Ways to Collect VAT on Digital Supplies?’ (2012) 1 World Journal of VAT/GST Law 1.
- Art 58 of Directive 2006/112. An illustrative list of electronic services covered by this article is set out in Annex II of the Directive.
- See Arts 357–69 of Directive 2006/112, and Council Regulation (EU) 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax [2011] OJ L77/1, Arts 58–62. As of 2015 these rules will be extended to EU suppliers of electronic services (including telecoms and broadcasting).
- For a critical assessment of the one-stop-scheme, see Lamensch (n 45) 6.
- Art 368 of Directive 2006/112.
- Arts 364 and 365 of Directive 2006/112.
- For a brief overview of the legal and economic characteristics of the US sales tax system, see van Brederode (n 36) ch 6, 71–98.
- Alaska, Delaware, Montana, New Hampshire and Oregon do not have a state sales tax. Together, those states comprise about 3% of the US population. However, in Alaska, sales tax is levied at the local level.
- During the last decades we have seen many studies, reports and proposals for a federal consumption tax in the form of a retail sales tax, credit invoice method VAT or direct subtraction VAT. For an overview, see Alan Schenk, ‘Prior US Flirtations with VAT’ in Tax Analysts (n 35) 52; and Robert F van Brederode, ‘Towards a Federal Sales Tax in the US?’ (2008) 19 International VAT Monitor 114.
- Raymond J Ring, ‘Consumer's Share and Producer's Share of the General Sales Tax’ (1999) 52 National Tax Journal 79. Very similar figures have been calculated for Canadian provinces with RSTs. See Michael Smart and Richard M Bird, ‘The Economic Incidence of Replacing a Retail Sales Tax with a Value-Added Tax: Evidence from Canadian Experience’ (2009) 35 Canadian Public Policy 85.
- 55 Source: Streamlined Sales Tax Project, www.streamlinedsalestax.org.
- 56 Art I(8) cl 3 of the US Constitution.
- McLeod v JE Dilworth Co, 322 US 327, 328 (1944).
- But technically the export price could include some RST not relieved by the exemption certificate (eg, on capital goods).
- As accepted by the Supreme Court in Henneford v Silas Mason, 300 US 577 (1937).
- Generally, states lack sufficient human resources to audit all businesses and with sufficient frequency. In addition, extraterritorial limitations of their jurisdiction prevent states from auditing out-of-state vendors, and therefore cross-checking by administrations is not possible.
- In the case of out-of-state purchases or purchases from private persons (C2C), sales taxes are not collected by the dealer and use tax will be collected upon registration with the Department of Motor Vehicles in a state.
- Art I(8) cl 3 of the US Constitution.
- Boston Stock Exchange v State Tax Commission, 429 US 318, 329 (1977).
- National Bellas Hess v Dept of Revenue for the State of Illinois, 386 US 753 (1967).
- Quill Corp v North Dakota, 504 US 298 (1992).
- The Supreme Court noted that the issue of taxing remote sales was ‘not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve’
- PricewaterhouseCoopers, Retail Sales Tax Compliance Costs: A National Estimate (2006), www.netchoice.org/wp-content/uploads/cost-of-collection-study-sstp.pdf.
- Robert J Cline and Thomas S Neubig, Masters of Complexity and Bearers of Great Burden: The Sales Tax System and Compliance Costs for Multistate Retailers (Ernst & Young, 1999). See also Lorrie Jo Brown, ‘Sales Tax Compliance Costs for E-Tailers Revisited: A Critique of the Ernst & Young Study’ (2000) 18 State Tax Notes 315, who suggests that those estimates grossly overstate the likely compliance cost, but does not herself provide comparable estimates for multi-state vendors.
- See, for more detail, van Brederode (n 36) ch 10, 280–97.
- New York was the first state in April 2008: see New York Consolidated Laws Service, Tax Law section 1101(b)(8) (vi).
- For Indiana, see News Release, ‘State Amazon.com, Reach Sales Tax Agreement’, Indiana Governor Mitch Daniels, 9 January 2012; and most recently for Massachusetts, see Press Release, ‘Patrick-Murray Administration Announces Agreement with Amazon’, Massachusetts Office of the Governor (Devil Patrick), 11 December 2012.
- Amazon.com LLC v Lay, No C10–664-MJP, 2010 WL 4262266 (WD Wash, 25 Oct 2010).
- For a detailed history of sales taxation in Canada, see Richard M Bird and Pierre-Pascal Gendron, ‘Sales Taxes in Canada: The GST-HST-QST-RST “System”’ (2010) 63 Tax Law Review 517.
- The remainder of this section draws on Neil E Bass and Pierre-Pascal Gendron, ‘Sales Taxation’ in Heather Kerr, Ken McKenzie and Jack Mintz (eds), Tax Policy in Canada (Canadian Tax Foundation, 2012) 8:1.
- The statute governing the GST/HST is the Excise Tax Act, RSC 1985, cE-15.
- For a recent discussion of policy issues arising from the GST/HST system, see Pierre-Pascal Gendron, ‘Canada's GST at 21: A Tax Expenditure View of Reform’ (2012) 1 World Journal of VAT/GST Law 125.
- These and other tax rules are summarised in plain language in Canada Revenue Agency, General Information for GST/HST Registrants (Government of Canada, 2010) 48, www.cra-arc.gc.ca/E/pub/gp/rc4022.
- Canada Revenue Agency, Harmonized Sales Tax—Place of Supply Rules for Determining whether a Supply is Made in a Province, Draft GST/HST Technical Information Bulletin B-103 (Government of Canada, 2012), www.cra-arc.gc.ca/placeofsupply.
- The CBSA is the federal customs administration in Canada. There are no provincial or territorial customs administrations in Canada.
- The CRA is the domestic tax administration in Canada. It operates separately from CBSA.
- ‘Mostly’ implies a threshold of 90%, which means that 90% or more of the value of the imports must be used in commercial activities to qualify. The corresponding threshold for financial services is 100%.
- The discussion that follows draws on Canada Revenue Agency (n 78) and Canada Revenue Agency (n 77).
- A detailed analysis of the treatment of real property under the GST/HST is provided in Benjamin Alarie and Pierre-Pascal Gendron, ‘Canada’ in Robert F van Brederode (ed), Immovable Property under VAT: A Comparative Global Analysis (Wolters Kluwer, 2011) 83.
- Canada Revenue Agency (n 78).
- Audrey Diamant, ‘GST/HST Place of Supply for Services’ (2012) 20 Canadian Tax Highlights 3.
- Jack Bernstein, ‘E-Commerce Taxation’ (2012) 20 Canadian Tax Highlights 9.
- Bird and Gendron (n 73) describe the revenue allocation formula.
- Formula is provided in Canada Revenue Agency (n 77) 43.
- See the discussion and examples in Anthony M Ruffolo, ‘The Hardly Simple Tax: Problems in Implementing the New Place-of-Supply Rules’ (2011) 1 Canadian Tax Focus 9.
World Journal of VAT/GST Law
Volume 2, 2013 - Issue 1