Establishing A Trusted Third Party for Taxing Global Electronic Commerce: System Architecture of Global Electronic Tax Invoice (GETI)

Abstract

This study deals with controversial issues surrounding cyber-taxation and recommends a feasible consumption tax system architecture called Global Electronic Tax Invoice System (GETI). GETI is an electronic consumption tax architecture to provide “all-in-one” tax and e-payment services through a trusted third party (TTP). GETI is designed to streamline the overall cyber-taxation process and provide simplified and transparent tax invoice services through an authorized TTP. To ensure information security, GETI incorporates Public Key Infrastructure (PKI) based digital certificates and other data encryption schemes when calculating, reporting, paying, and auditing tax in the electronic commerce environment. GETI is based on the OECD cyber-taxation agreement that was reached in January 2001, which established the taxation model for B2B and B2C electronic commerce transactions.For the value added tax systems, tax invoices are indispensable to commerce activities to provide documentation to prove the validity of commercial transactions. As paper-based tax invoice systems are gradually phased out and are replaced with electronic tax invoice systems, there is an increasing need to develop a reliable, efficient, transparent, and secured cyber-taxation architecture. To design such an architecture, several desirable system attributes were considered, reliability, efficiency, transparency and security. GETI was developed with these system attributes in mind.