UNCTAD comprises representatives of both private and government agencies and aims to provide concrete information about a sector which “has been subject to more far-fetched growth forecasts or sweeping statements about a bright future” than any other and highlights the importance of e-commerce for developing countries; “by reducing costs, increasing efficiency, reducing time and distances, e-commerce could become an important tool for development.”
Its E-Commerce and Development Report 2001 reviews trends and discusses the impact of e-commerce on the global economy and such economic sectors as tourism and finance. The Report also warns of the negative consequences should developing countries fall further technologically behind the industrialised world and cautions against allowing such a gulf to develop.
In order to avoid such technological borders, the Report calls for “urgent intergovernmental co-operation” in terms of regulation and taxation of the internet.
Income taxation largely depends on whether a business has “permanent establishment” in a country or not. OECD countries have agreed that a web site by itself cannot constitute permanent establishment, while a web server can, if it is owned by a business that carries on business through the server. However, "proposals by OECD countries have given scant consideration to developing countries' concerns in the field of e-commerce taxation", according to the Report, which also notes the "major differences" between EU and US approaches to international taxation rules on e-commerce.
As to consumption taxes, such as VAT or sales tax, there is a growing tendency to apply taxation in the place of consumption. This would actually work in favour of developing countries, as most of them rely heavily on such taxes for their government budgets and will be net importers of e-commerce in the medium term.
Although no customs duties are currently imposed on electronic transmissions, this is much discussed at the WTO, with a number of countries advocating a tariff-free environment for e-commerce and others expressing concern about possible revenue losses if products previously subject to customs duties are imported duty-free. Potential fiscal losses on border tariffs and other duties imposed on digital imports could total $8 billion world-wide. While on average this is less than 1% of total government revenue, tariff losses would be much greater in developing countries.