egal matter, the
relationship of an enterprise with its Internet service provider is simply a business contract for services to be provided to the enterprise rather than to act on behalf of the enterprise as a legal agent and in number of cases the agent are taxed for server rendered to their
Business concern. In number of case the
hosting server come in binding contract with enterprises for acting as agent and entire business activating by these agent. In such manner the putting these servers at tax net will not violate the international tax principles; but in number of cases it certainly would be extremely unusual for an Internet service provider to have any authority to enter into binding contracts on behalf of a business customer. Certainly, these enterprises can not dispose their
Businesses to server to act as agent which are no more different from a dependent agent than a telephone service provider, a mail courier, or a common carrier. If in fact there is a legal agency
relationship at all, then the Internet service provider currently acting as an independent agency if its function as accepted as legal facilitating the electronic commerce between business and purchase then there must be unlimited binding contract between three parties but in actual world of Internet is legally and physically impossible to do acting in the ordinary course of business and if it is legally and economically independent of the enterprise. I do believe that the legal tax environment the service rendered by these electronic servers and resulting factors would result in a dependent agency is rare. The current tax provisions are not adequately addressing this legal position of server provider. Tax authorities should have to clarify that the existing rules of agency apply to service provider in facilitating the electronic commerce that an Internet service provider which is economically and legally independent of the enterprise, and is acting in the ordinary course of
Business, is not a dependent agent and will not constitute a permanent establishment of the enterprise. This analysis also should apply to telecommunications cell services and electronic stock trading and their online facility provide by financial institute for delivery of online services.
The writer is an advocate of High Court and practicing immigration and corporate laws in Pakistan since September 2001. He is a self employed and pioneer in research on electronic commerce taxation in Pakistan. His articles were published widely in the critical areas of cyber crimes, electronic commerce, e-taxation and various other topics. He wrote LL.M thesis on titled "Legislation of electronic commerce taxation in Pakistan" in which he provided comprehensive legal proposals for statutory reconstruction of tax laws for purpose of imposition of taxation on e-Business in Pakistan. Currently he is conducting is research on topic 'Electronic commerce taxation: emerging legal issues of digital evidence'.Author can be contacted by adil.waseem@lawyer.com.
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