ABSTRACT
The chapter focuses on identifying the e-commerce challenges for tax authorities and taxpayers and analysing the tools that tax authorities have or should have at their disposal. The basic conclusion is that e-commerce could lead to more tax avoidance and evasion, especially in international trade, especially since e-commerce was indeed contributing to the growth of international trade. As far as VAT and customs is concerned, we have been observing, at least since the early 2000s, gradual efforts to adapt the system to the requirements of the digital economy. The latest trend is geared towards full digitalisation of VAT documentation and reporting, at least for international transactions and customs reform proposals made by the Commission in 2023. The situation is completely different in income taxation. The fundamental problem of international income taxation of e-commerce is the archaic paradigm of physical presence in a market jurisdiction. Without moving away from it, it is difficult to imagine an equitable allocation of e-commerce income taxation according to the principle of place of value creation. Pillar One (BEPS 2.0) is an attempt to change this paradigm, but for its effective implementation a multilateral treaty is necessary, which is undoubtedly a political and organisational challenge.
