A Study on the Improvement of VAT on Overseas Purchasing Agency in E-Commerce
Asian Tax Journal Vol. 16 No. 4 (2015), pp. 225-246
Abstract
With rapid advancement of internet and information technology (IT), individual import trading is progressing worldwide, in which consumers easily addresses product and its delivery information available in domestic and overseas market via internet and directly order them to overseas company. However, individual international electronic commerce resulted in many and frequent damages due to language barriers and international delivery. Therefore, this made import agencies related to on-line purchasing agency and off-line international complex transportation service appear and they purchased products and its payment on behalf of customers by querying customer list and connecting overseas web sites directly and provide follow-up service such as shipping status when customers request purchasing of products referring to product list and its price notified by those agencies. In this case, as an unavoidable problem in connection with international trading, following problems occurs, where people are unable to address practical economic phenomenon when they access conventional accounting and tax. This is because this kind of trading is combined with international logistics unlike existing transportation. Therefore, this paper is intended to analyze problems on taxation for e-commerce from overseas purchasing agencies and suggest how to improve them. First, it's necessary for taxation department in National Tax Service to subdivide business categories in tax declaration like those of Korea Custom Service. As tax statement for tax types i.e value-added tax statement, income tax statement and corporation tax statement in business category codes are best data to address business types, it would be easy to verify feasibility of tax payer's statement via computer by subdividing them on more detailed base. In this case, if business categories based on notification by Korea Custom Service are used by taxation authority in National Tax Service, it seems to be criteria to manage tax-related processes covering export and import declaration including tax statement. Especially those are believed to be very important criteria to determine refund of value-added tax. Second, it's necessary to clarify interpretation of 「Value-added tax law 」 for taxation authorities to apply zero tax rate for transportation service. Although standard taxation on value added tax specifies that it includes all that have monetary value to be paid such as money, fee and commission received from trading partners including freight fee and its transportation cost whether or not they are listed, it's not easy to apply zero tax rate as there is no clear interpretation of 「Value-added tax law 」 although subsidiary costs such as collect charge, handling charge, CFS and THC should be included for service cost paid by freight owners. Third, there is no consistency to apply zero tax rate for domestic inland transportation fee which is an extended contract with international transportation service and there are many co-loading cases (If a small amount of freight is transported and it can't be loaded into a single container, it is co-loaded on request) that a service provided by another transportation service provider on request of one transportation service provider is mostly regarded as a conciliation. This case needs to be regarded as 'Service by transporter' to apply zero tax rate. Fourth, if a traditional concept of fixed business is applied and when a business is conducted on consumption country by minimum personnel and facilities without installing a fixed business site, taxation right for business income tax in consumption country is unavoidable. Therefore, there are many cases that people gradually relocate their servers to oversea to avoid taxation in Korea and make a purchasing web site for domestic customers as an import agency, or there are also many cases that they relocate servers to overseas for reversed import. Therefore, it's reasonable that a purchasing web site for non-residing purchasing agent is regarded as a business site and tax is imposed on those sites.
Keywords
- e-Commerce
- Overseas purchasing agent
- Import agent
- Purchasing agent
- transportation agent