The volatile electronic business is characterized by a seamless, borderless, and timeless marketplace. In this connection the internet is accelerating a number of trends that are laying the foundation for a new global economy, in which production and consumption become more mobile, dynamic, intangible, and multinational. The shift from a manufacturing-based economy to a service-based economy, working with etools and the dominance of information technology industry, knowledge man-agement and intangibles in ebusinesses will influence a revision of the current tradi-tional national-specific principles of accounting and taxation considering worldwide trade and commerce (”death of distance”).
The consequence of that globalization effects will be a challenge to the philosophy of traditional accounting and taxation and promote an acceleration of global harmoniza-tion of the principles of accounting and taxation.
The new business development and creation of innovative business planes in ebusi-nesses have to consider those certain properties and facilities of eManagement of resources in accounting and taxation.
The guideline will give some practical approaches and issues for planning ebusi-nesses considering the essential rules, directives, regulations and principles of ac-counting and taxation (“state of the art”).
Purpose of the project is to search in relevant German, U.S. and other references for relevant material about accounting and taxation of ebusinesses, summarize and structure the essentials to a practical guide for developing and planning ebusinesses.
Based on the relevant accounting principles for ebusinesses in German commercial law (HGB), International Accounting Standards (IAS) and US-General Accepted Ac-counting Principles (US-GAAP), sales and use tax, and income tax in Germany and US, the highlights of the content are web-based businesses, nexus based on server location, mobility of web-based businesses, web site expense deductions, acquisi-tions and dispositions of web-based businesses, valuation subjects and the relevant international recommended methods of transferpricing for multinational enterprises and tax administrations (OECD guidelines) corresponding to their certain cases of application.
Result of the project is a well-structured practical guide for developing and planning ebusinesses from accounting and taxation perspectives with implications for creation of business models and a lot of hints to further references.
Table of Contents
1. Introduction
1.1 Different Accounting Principles in the world
1.2 Properties and Essentials of eBusiness Models and their Implications to accounting and taxation
1.3 Creation opportunities of Legal entities and their Implications to Taxation
2. Accounting Aspects
2.1 German Commercial Law (HGB)
2.1.1 Capitalizing Web Sites In German Balance Sheets
2.2 International Accounting Standards (IAS)
2.2.1 Intangibles (IAS 38)
2.3 US-General Accepted Accounting Principles (US-GAAP)
2.3.1 U.S.-Perspective of Intangibles
2.4 Web Site Valuation
3. Taxation Aspects
3.1 Consumption Tax
3.1.1 Value added Tax (VAT) in Germany
3.1.2 VAT in Europe (EC directives and recommendations)
3.1.3 Sales and Use Tax in US
3.2 Income Tax
3.2.1 Income Tax in Germany
3.2.2 Income Tax in Europe
3.2.3 Multistate Income Tax in US
4. Transferpricing
4.1.1 Comparable Uncontrolled Price (CUP)
4.1.2 Resale Price Method (RPM)
4.1.3 Cost Plus
4.1.4 Comparable Profits Method (CPM)
4.1.5 Residual Profit Split (RPS)
4.1.6 Application of Transfer Pricing Methodologies (TPM) to eBusiness Transactions
4.2 Tax Authority and Law
4.2.1 Penalties
4.2.2 Defending a Transfer Price and Advanced Pricing Arrangements (APA)
5. Implications for creation of eBusiness Models
6. Development and Trends in Future
7. Appendix
8. References
Objectives and Core Themes
This report aims to develop guidelines for eBusiness entities by navigating the complex landscape of international accounting standards and global taxation frameworks. It examines the challenges posed by the internet—such as borderless commerce and digital intangibles—on traditional tax and reporting principles, while exploring strategic options for legal entity structuring to ensure tax compliance and efficiency.
- Comparative analysis of international accounting philosophies (HGB, IAS, US-GAAP).
- Tax implications of diverse eBusiness models and digital commerce trends.
- Strategic evaluation of legal entity structures for tax optimization.
- In-depth study of transfer pricing methodologies within electronic business transactions.
- Practical guidance for tax compliance and the role of Advanced Pricing Arrangements.
Excerpt from the Book
1. Introduction
At the dawn of the 21st century, the age of the internet is posing significant challenges to global accounting and taxation systems. The nations of the world are entering a promising volatile electronic-business (ebusiness) realm that is characterized by a seamless, borderless, and timeless marketplace.
In this connection the internet is accelerating a number of trends that are laying the foundation for a new global economy, in which production and consumption become more mobile, dynamic, intangible, and multinational.
The shift from manufacturing-based economy to a service-based economy, working with etools and the dominance of information technology industry, knowledge management and intangibles in ebusinesses will influence a revision of the current traditional national-specific principles of accounting and taxation considering world wide trade and commerce (”death of distance!).
The consequences of that globalization effects will be a challenge to the philosophy of traditional accounting and taxation and promote an acceleration of global harmonization of the principles of accounting and taxation.
Summary of Chapters
1. Introduction: Outlines the shift toward a global, digital-service economy and the resulting challenges for traditional accounting and tax systems.
2. Accounting Aspects: Provides a comparative overview of how different national and international standards (HGB, IAS, US-GAAP) treat intangible assets in eBusiness.
3. Taxation Aspects: Discusses the impact of consumption and income taxes on eBusiness models, including the complexities of international trade and tax treaties.
4. Transferpricing: Explains the necessity and methods (CUP, RPM, Cost Plus, CPM, RPS) for setting transfer prices in multinational electronic commerce.
5. Implications for creation of eBusiness Models: Offers strategic advice on structuring eBusiness entities to navigate cross-border tax issues and operational losses.
6. Development and Trends in Future: Explores expected changes in global tax regimes and the potential influence of U.S. policy leadership on future international regulations.
Keywords
eBusiness, International Accounting, Taxation, Transfer Pricing, Intangibles, IAS, US-GAAP, HGB, Tax Compliance, Consumption Tax, Income Tax, Digital Products, Global Economy, Permanent Establishment, MNC
Frequently Asked Questions
What is the core focus of this report?
The report provides a comprehensive guideline for eBusiness enterprises on navigating the divergent international requirements for financial reporting and corporate taxation.
What are the primary thematic areas covered?
The primary themes include accounting for intangibles under various standards, the taxation of digital products and services, and the application of transfer pricing methods in global electronic transactions.
What is the ultimate objective of the research?
The goal is to assist managers and tax professionals in understanding how to structure eBusiness models that satisfy both business objectives and international tax compliance mandates.
Which scientific methods are applied?
The report employs a comparative analysis of international regulatory frameworks, case study applications of transfer pricing methodologies, and an evaluation of existing accounting statutes across major economies.
What topics are discussed in the main body?
The main body covers the transition from manufacturing to service-based eBusiness models, technical requirements for asset capitalization, the nuances of consumption and income taxation in different jurisdictions, and detailed transfer pricing frameworks.
Which keywords best describe this work?
The key concepts include eBusiness, International Accounting, Transfer Pricing, Taxation, Intangibles, and Multinational Compliance.
How does the author characterize the impact of the internet on taxation?
The internet is described as a force creating a "death of distance," rendering traditional location-based tax rules difficult to apply to borderless, remote digital services.
Why are Advanced Pricing Arrangements (APAs) significant in this context?
APAs are highlighted as a proactive tool that allows taxpayers to establish agreed-upon transfer pricing methods with authorities, thereby reducing audit times and fiscal uncertainty.
- Quote paper
- Paul-Jürgen Sparwasser (Author), 2001, Development-Guideline of eBusiness considering international accounting and taxation aspects, Munich, GRIN Verlag, https://www.grin.com/document/35315
