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The challenge of controlling online small business

By Jean-Claude Elias - Mar 08,2018 - Last updated at Mar 08,2018

Shopping and working online present many and obvious advantages. It is a trend that can hardly be fought and that knows no boundaries, literally. It is precisely the fact that it has no borders that makes it so strong and irreversible. Whether it can or cannot be controlled, where there are statistics and information about it or not, it is just irrelevant. All that matters is that the population is going for it.

Because technology evolves faster than legislators are able to update laws or write new ones, online business, or e-commerce as many prefer to call it, is constantly lagging when it comes to controlling it, be it for tax purpose or imposing customs duties, or simply for fair competitive practice, advertising or statistics and all that these various aspects entail.

Actual online business trading involving significant amounts, typically exceeding $50,000 per single transaction, obeys rules and is somewhat controlled. On the other hand, it is usually personal online shopping and freelance work that remain elusive, for they involve much smaller amounts. However , small these per-transaction amounts may be — sometimes just a few dollars — this sector is becoming a major component of the world economy, given the huge number of transactions that take place, because of online freelance work more particularly, more than online shopping.

Online freelance work is clearly increasing but precise statistics are not available. The main indicators of the increase are the countless ads seen all the time on social networks and online news media, and the steadily growing number of PayPal active registered subscribers that went from 90 million in 2010 to 225 million by the end of last year, with an almost perfectly regular linear growth. PayPal is the web payment platform that most sellers and buyers prefer to use.

Payments made or received on PayPal go through legal, yet , transparent and open channels that leave room for undeclared revenues and undisclosed business volume or information. PayPal would automatically report to the IRS (the US Tax Department), payments received by a user that would exceed a total of $20,000 per year and whenever there were more than 200 transactions effected on that user’s account in any given year. PayPal — in principle — is not bound to report to other countries.

From its end the Jordanian tax department is applying a special formula to online business purchases, to compensate for revenue lost on local sales tax. France is trying to control the impact of advertising on Facebook and on purchases made by its citizens on Amazon US site. The European Union is seriously considering imposing on Google, Apple, Facebook and Amazon a direct tax between 2 and 6 per cent on their online sales to consumers in Europe (, 4 March 2018).

Naturally, bitcoin has its share in making information pertaining to online business harder to collect. Just last week, SMS were sent one more time to mobile subscribers in Jordan, reminding them that dealing with the virtual currency was considered as illegal in the country.

The trend to shopping and working online is strengthened not only by current social and economic factors , but also by the fact that computers, mobile devices and networks are getting faster by the day. Indeed, a fast processing machine and a fast Internet, ideally over fibre optics, make shopping and working online more attractive, more efficient and more productive.

Lawmakers will have to find a way to adapt the law to technology, not the other way round.

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