Ecommerce can play a pivotal role in fostering growth and raising living standards, particularly for developing countries, the World Trade Organization (WTO) has said.

“By reducing the trade costs associated with physical distance, ecommerce allows businesses to access the global marketplace, reach a broader network of buyers and participate in international trade,” WTO Director-General Roberto Azevedo told a workshop here on July 5, 2016.

The workshop was organised by the governments of Mexico, Indonesia, South Korea, Turkey and Australia.

Azevedo listed the obstacles faced by developing countries, such as high digital infrastructure costs, lack of compliance with legal and fiscal requirements of foreign e-markets, underdeveloped financial and payment systems and low consumer trust.

He said the Micro, Small and Medium Enterprises (MSMEs) in developing countries often “do not have the ability to get around these problems”.

“We could look at how we can support small suppliers to market their products in a timely fashion, with competitive prices and reliable customer support. This would help consumers to have full confidence in buying from MSMEs in the digital environment,” Azevedo said.

The workshop, which had inputs, among others from Indian NGO Consumer Unity and Trust Society (CUTS) International, was told that Africa and the Middle-East share less than two per cent of the world e-commerce market.

Meanwhile, the draft bill of India’s destination-based, dual VAT-type Goods and Services Tax (GST) published last month has clarified that all e-commerce transactions will attract GST which will be collected by the service operator as soon as the supplier receives payment.

The model GST law, approved by Indian states’ Finance Ministers says: “Every electronic commerce operator shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount representing consideration towards the supply of goods and/or services made through it.”

Bringing ecommerce under the purview of GST, which will unify the myriad indirect taxes, is likely to end the kind of recent arbitrary moves by state governments of Uttarakhand, Assam and Bihar that imposed a 10% entry tax on goods sold online.

Ecommerce companies in India have to currently deal with a complex tax framework involving VAT, central sales tax (CST), excise, and service tax.

For instance, for digital downloads like software, music and e-books, confusion over whether the transaction is for sale of goods attracting VAT and CST, or a provision of service liable for service tax, has led to many litigations.

Source: The Times of India