Harmonizing global internet tax: a collaborative extranet model

Abstract

The advent of Internet Commerce represents a significant threat to taxation revenue collection for governments throughout the world. Governments cannot prevent the creative and innovative commercial use of the Internet in developing new busi­ness opportunities. Taxation authorities are, arguably, in a worse plight than Jean Baptiste Colbert, treasurer to Louis X IV, who is reported to have said: 'The art of taxation consists in so plucking the goose to obtain the largest amounts of feathers, with the least possible amount of hissing'. The Internet Commerce problem, of course, is not in obtaining the most feath­ers, but getting hold of the virtual geese. The researchers have developed a theoretical model for the taxation of Internet Commerce using a knowledge management approach to the resolution of the taxation issues in electronic commerce by em­phasising evidence based medicine as an appropriate metaphor. The application of Cochrane's principles on collaboration and maintenance are combined with knowledge management principles in an attempt to advance the ecommerce taxation debate. This notion of evidence-based taxation is founded in the requirement for crucial diagnostics regarding taxpayer intent in effecting economic advantage and in the identification of the respective taxation (compliance) models that would apply to a specific set of commercial circumstances. It is the writers' contention that international and national taxation authorities could benefit from adapting some of the ideals of evidence based medicine to an evidence based taxation focus. It takes the novel approach of drawing on the Cochrane principles to support the authors' contention that an Extranet may well become the preferred delivery mechanism for knowledge management in tax administration. This paper defines Extranets, outlines some innovative uses of Extranets and discusses the theoretical framework of Extranets as a potential method for global co-operation as per the Cochrane Convention.