| Remote on-line sale has some features which are different from those of traditional commercial transaction mode, and has posed challenges to the application of Chinese current general turn-over tax systems such as the Value-added Tax and the Business Tax. In view of the contents of current various on-line sale transactions, the current taxation scopes of China’s Value-added Tax and Business Tax and the trends of international reconciliation on E-commerce taxation, China should clearly identify on-line digital transactions as supplies of taxable services or intangible property in the sense of the Business Tax. For the sakes of avoiding both domestic and international double taxation, protecting China’s tax rights and interests in remote on-line transactions and realizing the fair competition between onshore and offshore enterprises, China’s current Business Tax system should differentiate the inland on-line sales from the cross-border on-line transactions, and apply the tax jurisdiction of the provider’s place to the inland on-line transactions and the tax jurisdiction of the receiver’s place to the cross-border on-line sales respectively.With respect to the method of the Business Tax collection applicable to the cross-border on-line transactions, the reverse-charging tax collection mechanism should be applied to B-to-B on-line transactions. For B-to-C on-line sales, in order to reduce taxpayers’ compliance burden and improve the efficiency of levying Business Tax on remote on-line sales, China’s Business Tax system should adopt the taxation mechanism of requiring the non-resident enterprises to make tax registration in China, simplify the registration requirements on non-resident enterprises and provide them with necessary facilities to identify the identities of the customers and the countries they live in. |
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