The jurisdiction to tax Highly Virtual Enterprises

Abstract

Research for this thesis commenced in September 2011, with earlier preliminary research taking place from October 2010. The onus for undertaking this research was a belief that the challenges to international tax law posed by electronic commerce - which had gone largely unchecked - would soon need to be addressed by policymakers. It was anticipated that the financial crises of 2008-2011, and the resulting loss of government revenue - would precipitate an impetus to, at last, address these issues. This prediction has proved to be a correct one. This thesis commences with a broad conceptual overview of the subject area. It identifies the jurisdictional challenges that have arisen in international taxation, and catalogues the efforts that have hitherto been made to address these challenges. This thesis proceeds to consider the economic and legal basis for existing jurisdictional rules-the concept of taxation at source, and the permanent establishment threshold-aswell as proposing a revised jurisdictional standard which would better address the challenge of highly virtual enterprises. Finally, this thesis considers other threshold standards that have been proposed, or that already exist.