The primary principles underlying our approach to electronic business are the same as those for traditional business and this is in line EU and OECD norms in this regard. In other words, the current tax rules and systems are applied as far as is possible to e-commerce and where difficulties are encountered with this approach some fine tuning may be necessary. The aim is to ensure a neutrality of treatment of transactions whether carried out by e-commerce or by more traditional commercial methods. For Irish businesses, it is expected that the current taxation rules will be robust enough to cope with any increase in e-commerce transactions.
There is, however, a possibility that there may be some problems with collecting taxes from outside the EU. At the moment much e-commerce transactions relate to the on-line ordering and physical delivery of goods. If there is a significant increase in the amount of goods physically delivered, this could cause some distortion of trade between EU and non-EU traders and this may require further examination. Solutions in the area of e-commerce will require international action and Ireland has been contributing to the debates on solutions at EU and wider international levels.
The Government recognises that there may be a need for future changes to direct and indirect taxes to ensure the effective taxation of e-commerce. We also recognise the advantages of encouraging this sector to grow and the possible competitive opportunities there are for Irish-based businesses in this field. This issue and the need for balance has been examined by the Tax Strategy Group and in a recently published discussion paper by the Revenue Commissioners on electronic commerce and the Irish tax system. I will arrange to have these documents forwarded to the Deputy.