Selling goods over the Internet is conducted and treated the same way as commercial transactions in traditional bricks and mortar stores. But what exactly are the laws and regulations regarding issuing invoices in online commerce?
Online transactions are on the rise
To better understand the problem, it is important to mention that online transactions have seen a steady rise in their use ever since the Covid-19 pandemic struck our lives a couple of years ago. Nowadays, more and more consumers have become used to purchasing their products or services using the online modality.
Professor Richard T. Ainsworth, at the Boston University, published a paper on the so-called “Netflix Tax”, in which he examines how the technology-accelerated increase in cross-border sales threatens revenue in residence-based VAT systems and how companies like Netflix could be taxed. He also compares New Zealand’s legislative approach with technological solutions powered by TaxCore® (such as Fiji’s VMS system) and considers how the approaches might be combined to fight tax loss. Obviously, this problem has only become more serious since the Covid-19 pandemic outbreak.
- Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s ‘Netflflix Tax’ (Part 1)
- Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s ‘Netflflix Tax’ (Part 2)
- Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s ‘Netflflix Tax’ (Electronic Marketplaces) Part 3
- Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s ‘Netflflix Tax’ (Part 4)
What does the law prescribe under these circumstances?
The law is very clear in these situations. Remote, electronic, or “online” trade differ only in one aspect: the personal presence, or absence, of the seller and buyer. It is not necessary or mandatory for the buyer and seller to be physically present in the store for the sale to happen. In order to be a legal business, online stores do, however, need to comply with the laws and regulations on fiscalization, which is already present in countries that were fiscalized using the TaxCore® system such as Serbia.
Merchants who sell goods over the Internet, just as conventional brick and mortar businesses, have to record the turnover through fiscal devices, to issue a fiscal invoice to the customer together with the product or service, and to record transactions via an electronic fiscal invoice. The invoices can also be sent electronically as long as the customer gives their consent.
What about the specifics, like the cost of delivery?
Whether or not a separate fiscal invoice will be issued for the delivery of the goods ordered over the Internet depends on whether the cost of delivery is included in the price. If the cost of delivery is included in the price of the goods paid by the customer, it will be shown on the fiscal invoice. If, however, the customer paid only for the goods, without the delivery costs, the delivery company (if it’s a separate company from the retail online shop) is then obliged to issue a separate fiscal invoice for the delivery costs. In any case, the delivery costs must always be shown on the online store from which the goods are bought.
In Data Tech International, we always like to remind everyone that a fiscal invoice is of extreme importance since it serves as proof that the tax for a particular purchase has been correctly calculated and paid. These funds are effectively returned to the Tax Administration budget and are in turn used for the construction of highways, hospitals, schools, and kindergartens, which directly benefit the citizens.
Therefore, by asking for a fiscal receipt, citizens can actively aid in the fight against the grey economy and thus contribute to the further development of the state and society.