Iostore Vat Avoidence

List Of Contents                                                                                       Page

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1.Introduction        

2.Methodology        

3.Result        

4.Discussions        

6.Bibliography        

7.Appendix……………………………………………………………………………………………………………………………10

1.Introduction

The development of electronic commerce(Also named E-commerce) set up a new and convenient platform for shopping. However, it may causes VAT(value added tax) avoidance and it has been argued (Bird and Gendron 2007, pp. 139-140 )  that even in countries with well-developed VAT administrations, it is hard to regulate and record B2C(business to customer)activities such as selling digitized service  to nonregistered payers, which raise the government’s attention about online selling. But there have possibilities that VAT avoidance can exist in not only virtual product transaction but also real product transaction. Now, IOStore becomes more prevalent to sell products on the internet.

Definition:

IOStore (Individual Online Store): Someone who have access to get brand new products from factory directly and sell them to others though social media such as facebook, twitter, google+. etc.(1.often offer a lower price than shopping center. 2.except using service platform like ebay or Amazon. etc)

Because of lacking transaction evidence and records, the government may loss VAT revenue if the seller didn’t pay tax consciously. Also, money flow to the IOStore can reduce people’s purchasing power for formal business store, which could reduce tax revenue in an indirect process. Moreover, IOStore with out regulation and supervision  may cause serious impact to formal business store in the future.

The purpose of this report is to examine whether the government experience a VAT tax loss because of the rapid growth of IOStore.

Hypothesis: The rapid growth of  IOStore reduce the government VAT revenue

2.Methodology

In order to find out whether our hypothesis can be proven or not, questionnaire was designed to find out people’s perception toward to IOStore and draft was handed out first to other classmates to testify if  these questions are reasonable and easy to understand.

Because young people are more likely to use internet to buy products so the final questionnaires was filled by young people from age 15-25 on the street around Cardiff Central Market. The number of questionnaires were collected is 20, including 11 filled by male and 9 by female(20 all locals).