John Bruton
Question:30 Mr. J. Bruton asked the Minister for Finance the implications of tax free Internet shopping for the tax base and for retail patterns; and if he will set up an interdepartmental study of the matter. [17302/99]
Written Answers. - Internet Shopping.
In this country, there is no such thing as tax free Internet shopping. Given the growing economic importance of e-commerce for all business activity not least for retail sales, taxation policy requires that most transactions will be subject to taxation. It would be unfair and uncompetitive if e-commerce transactions did not attract taxes while conventional business and retail activity continued to be taxed.
The current tax rules and systems, particularly VAT, are therefore applied in as far as possible to e-commerce transactions with the aim of ensuring neutrality of transactions whether carried on by e-commerce or more traditional methods.
I do recognise that Internet shopping raises challenges for Government and may impact on the tax base. Therefore changes to the admin istration and collection of direct and indirect taxes to preserve the tax base and ensure the effective taxation of e-commerce may be necessary. This requires co-ordinated international action and Ireland has been contributing significantly to the policy debate in the OECD and the EU on this topic. In the short-term, the most immediate concern is with VAT and a European Commission proposal in this area is possible shortly.
As regards the Deputy's suggestion about an interdepartmental study I would point out that the Revenue Commissioners published an analysis of the taxation issues in Electronic commerce and the Irish Tax System in June 1999. Given the comprehensive nature of the document, I see no
need for any further interdepartmental study at this stage but will keep the matter under review.