Does e-commerce ease or intensify tax competition? Destination principle versus origin principle

Hiroshi Aiura () and Hikaru Ogawa
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Hiroshi Aiura: Nanzan University

International Tax and Public Finance, 2024, vol. 31, issue 3, No 3, 702-735

Abstract: Abstract This study examines the relationship between e-commerce development and the intensity of commodity tax competition under two tax principles for goods purchased online: the destination principle and the origin principle. The main findings are as follows: Given that origin-based tax is applied to purchases made in brick-and-mortar stores, (i) tax competition under destination-based taxation on e-commerce is more intense than tax competition under origin-based taxation; and (ii) the expansion of the online market intensifies destination-based tax competition while easing origin-based tax competition. The main factor leading to the results is that replacing the choice of “where to purchase” goods, consumers will have a new choice of “how to purchase” when online purchasing becomes available, and destination-based taxation distorts the latter choice, while origin-based taxation is neutral.

Keywords: Tax competition; E-commerce; Tax principles (search for similar items in EconPapers)
JEL-codes: H21 H71 H87 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10797-023-09796-8

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