UK debates dotcom tax

The UK has taken a lead in the debate over how ecommerce businesses should be taxed, saying overseas companies that merely locate their servers in the country should be exempt.

Currently there is little international consensus on the issue, which is plagued by the competing interests of different tax regimes.

But now Gabs Mahklouf, director of the Inland Revenue's international division, is attempting to move the discussions on. He told a conference in Lisbon that early decisions are needed on the status of websites and internet servers. "We need decisions that work in the real world as well as in the heads of lawyers," he said.

Mahklouf said neither the location of the website nor a server are sufficient reasons to tax a company. "We take that view regardless of whether the server is owned, rented or otherwise at the disposal of the business".

His views have been given a cautious welcome by the Organisation for Economic Corporation and Development, which in September will publish its own opinions on the tax status of dotcoms.

The group is examining whether internet companies should always be taxed in the country of their headquarters, or if there are circumstances in which they should be taxed elsewhere.

Under discussion is the issue of whether an online casino should be taxed according to the location of its server through which all transactions are routed, or if the host company should be taxed.

Current uncertainty over the tax laws relating to internet gambling has led to many companies locating their servers offshore, with most of the big UK betting organisations setting up their internet operations in places such as Gibraltar and the Isle of Man because.

This story has been republished from uk.internet.com

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