Is the Allure of VAT Justified?

Abstract

The preeminent points at issue are the application of taxation on eCommerce; the submission that VAT supersedes income tax in flexibility and adaptability in respect of eCommerce; and the espousal of VAT as the most practicable and effective means of application of tax on and implementation of tax in eCommerce. The point in question should not be whether eCommerce should be subject to taxation, but rather the impact of technology on taxation, most specifically in respect of the most effective modus operandi of imposing tax on an eCommerce impelled by proliferating technology. If an activity or income earned or generated in the traditional world is taxable, then it may be argued that taxable activities in the virtual world should be equally taxable.

Notwithstanding administrative problems which impede the effective imposition of VAT in the virtual world, the resolution of which presupposes governmental co-operation across jurisdictions, it is submitted that within the realms of an unbounded environment contingent upon ameliorating technology, the flexible and amenable nature inherent to VAT makes VAT the preferred taxing system to be ardently pursued by jurisdictions as the eTax solution to eCommerce.