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28 Int'l Tax J. 1 (2002)
Electronic Commerce, Transnational Taxation, and Transfer Pricing: Issues and Practices

handle is hein.journals/intaxjo28 and id is 109 raw text is: Electronic Commerce, Transnational Taxation, and Transfer Pricing: Issues and Practices SUSAN C. BORKOWSKI Susan C. Borkowski is a professor of accounting and joint faculty in the Integrated Science, Business, and Technology Program at LaSalle University in Philadelphia, PA. The development of electronic commerce can be said to be the greatest event in the economic history of mankind, next only to the Industrial Revolution.1 The IRS says [that] acceleration of world trade and e-commerce in the business world exceeds the government's capacity to administer taxes.2 I t is widely agreed that from a financial perspective, transfer pricing is probably the most important tax issue in the world and one of the most complicated to understand and administer.3 In addition to being a tax issue, however, transfer pricing is a business issue that involves supply chain management, location of shared services, [and] where to locate manufacturing entities.'4 This complexity is compounded when transfer pricing is applied to electronic commerce (e-commerce) transactions. The lack of physical borders and physical presence, the exponential growth in the number of e-commerce transactions, and the creation of unique intangibles and highly specific services are causing tax 1. B Shah and Daksha Baxi. 2000. E-commerce taxation evolves in India. 21 Tax Notes Int'l, Oct 23, 1923. 2. A Hamilton, 2001. IRS to conduct confidential transfer pricing documentation survey. 2001 Tax Notes 167-2 Aug 28. 3. G Guttman. 1999. International panels explore challenges of transfer pricing. 85 Tax Notes, Nov 1, 590, 590. 4. Guttman 1999, 590.