Written Answers. - Electronic Commerce.
Dan Wallace
Question:
40
Mr. D. Wallace
asked the
Minister for Finance
the steps, if any, he is taking to ensure that individuals and corporate bodies who use the Internet to purchase goods and services, particularly goods and services from other States, do not avoid the payment of tax on such purchases; and if he will make a statement on the matter.
[11311/97]
Purchases of goods and services over the Internet are still a relatively new innovation and the Revenue Commissioners are monitoring the tax position of such new forms of electronic commerce, particularly with regard to the impact on VAT. The Revenue Commissioners are also participating in multi-national discussions with the OECD and the EU on this subject.
To date the most successful use of the Internet for commerce is in areas where the supply of goods is relatively easy and issues such as quality of the merchandise do not require prior inspection by the client. VAT rules would vary depending on whether goods or services are involved and on whether the consumer is a business or a private individual.
Goods purchased on the Internet from within the EU are taxable in the State under the existing intra-Community acquisition procedures. If the goods are supplied from outside the EU, then they are subject to VAT and EU customs duties on importation in the normal way. In either case, the tax is payable here and must be accounted for by the Irish customer.
Services provided on the Internet, for example financial advice or consultancy services, would be subject to VAT under the reverse charge mechanism, which means that the customer must account for VAT through his VAT return.
A private individual who orders goods on the Internet from a supplier outside the EU will pay VAT on importation in the normal way. He may also be liable to customs duties. For goods purchased within the EU, VAT at the rate applicable in the other member state will be payable if the supplier is established in another member state and not required to register here.
The position for services is more difficult as the place of establishment of the supplier determines whether the supply is subject to VAT or not. This means that services supplied from within the EU would be taxable, but those supplied on-line from outside the EU would currently not be liable. It is unlikely that such services have any major impact on VAT revenues at present.
All present indications are that the level of commerce on the Internet is marginal in terms of overall business. However, this could change and, as I have mentioned already, the position is being reviewed nationally and internationally.
