Invisible bits and bytes make taxing on-line purchases difficult
That's the challenge on-line shopping is posing Polish tax authorities, computer executives said. Physical goods such as computers or hardware purchased over the internet eventually get Polish duties slapped on them when shipped. But anything that takes an electronic form, such as DVD videos, software or music, can easily pass into the country unnoticed and untaxed.
Right now, however, the amount of goods bought on line here is so small that tax officials are hardly worried. Computer executives said, though, that fast-growing e-commerce could cause tax evasion problems in the future.
"Such a problem doesn't exist in Poland yet," said Rafal Plutecki, deputy chairman of the Polish Chamber of Information Technology and Telecommunications. "In 1998, e-commerce turnover accounted for just several million dollars. It's practically invisible money."
At least outside of Poland's borders it is. Because Polish companies must pay VAT on their goods sold, Polish e-commerce sites already include the duty in the price of their goods. The same goes for computer distributors, who must actually get their goods through customs to deliver inside the country. But sites outside the country, such as Amazon.com, are not subject to Polish taxes and therefore anything delivered through non-physical channels - such as a download from the internet - can escape the duties.
That in part makes the price of many goods offered outside of Poland's reach more attractive than those sold in country. A consumer can buy a DVD movie, for example, at both Amazon.com as well as at Poland-based cybersam.com. But the price of that movie, take "Shakespeare in Love" for example, is 30% cheaper at Amazon.com than at the Polish cyber store, according to prices listed on both sites. The game Star Wars Episode I Simon is also 20% less expensive at Amazon.com than at Comat, another Polish internet store.
The discount doesn't have Poles logging on and going on a buying spree, however. One reason is the relatively low computer penetration in Poland and the mere 1.5 million internet users here. Krakow's Academy of Economics, which recently surveyed web users, found that only 9.2% of people who said they use the internet actually shop on line.
That is expected to change, however. Internet use is forecast to grow 30-40% annually for the next several years, and once purchasing concerns such as credit card security are straightened out here, e-commerce could pick up considerably.
According to Plutecki, the development of on-line commerce will push the tax question in other nations, although not yet in Poland.
"I am sure that certain tax mechanisms (which then can be followed in Poland) will be worked out in the more advanced, electronically, countries where e-commerce is very popular, such as the United States," he said.
The bigger stumbling block, though, is security. According to the Academy of Economics' survey, 32.6% of respondents said that they do not shop on line because they think it is dangerous to give away a credit card number in that manner.
"Many Poles still consider the internet to be a place full of hackers, and crooks," said Jaroslaw Polukoszko, marketing director at web site developer AGS New Media.
The result is that while the number of internet stores in Poland has grown exponentially over the last two years, from just a handful to about 100 now, the average yearly turnover is still relatively low. Revenue for all internet services in Poland came to about zl. 220 million ($56.4 million) last year, according to monthly magazine Teleinfo, although internet access providers accounted for about half of that.
The growth in the number of cyber stores may mean that fewer transactions will take place outside of the country, computer executives said. The prevalence of cyber stores based here means that more consumers may purchase goods at a Polish site, with VAT included, rather than go hunting for another cyber location. That is particularly true for physical goods, which require delivery and therefore must be waited for and could possibly be damaged in transport.
"Most goods I know of, are bought in Poland-based on-line stores," said Tomasz Hipsz, owner of HBZ Internet store, whose site claims to attract 10,000-40,000 strikes per month.
He said that his site's competitive price is not the only reason shoppers congregate there. "It's also due to a shorter delivery time and compatibility with Polish standards."
Right now, however, the amount of goods bought on line here is so small that tax officials are hardly worried. Computer executives said, though, that fast-growing e-commerce could cause tax evasion problems in the future.
"Such a problem doesn't exist in Poland yet," said Rafal Plutecki, deputy chairman of the Polish Chamber of Information Technology and Telecommunications. "In 1998, e-commerce turnover accounted for just several million dollars. It's practically invisible money."
At least outside of Poland's borders it is. Because Polish companies must pay VAT on their goods sold, Polish e-commerce sites already include the duty in the price of their goods. The same goes for computer distributors, who must actually get their goods through customs to deliver inside the country. But sites outside the country, such as Amazon.com, are not subject to Polish taxes and therefore anything delivered through non-physical channels - such as a download from the internet - can escape the duties.
That in part makes the price of many goods offered outside of Poland's reach more attractive than those sold in country. A consumer can buy a DVD movie, for example, at both Amazon.com as well as at Poland-based cybersam.com. But the price of that movie, take "Shakespeare in Love" for example, is 30% cheaper at Amazon.com than at the Polish cyber store, according to prices listed on both sites. The game Star Wars Episode I Simon is also 20% less expensive at Amazon.com than at Comat, another Polish internet store.
The discount doesn't have Poles logging on and going on a buying spree, however. One reason is the relatively low computer penetration in Poland and the mere 1.5 million internet users here. Krakow's Academy of Economics, which recently surveyed web users, found that only 9.2% of people who said they use the internet actually shop on line.
That is expected to change, however. Internet use is forecast to grow 30-40% annually for the next several years, and once purchasing concerns such as credit card security are straightened out here, e-commerce could pick up considerably.
According to Plutecki, the development of on-line commerce will push the tax question in other nations, although not yet in Poland.
"I am sure that certain tax mechanisms (which then can be followed in Poland) will be worked out in the more advanced, electronically, countries where e-commerce is very popular, such as the United States," he said.
The bigger stumbling block, though, is security. According to the Academy of Economics' survey, 32.6% of respondents said that they do not shop on line because they think it is dangerous to give away a credit card number in that manner.
"Many Poles still consider the internet to be a place full of hackers, and crooks," said Jaroslaw Polukoszko, marketing director at web site developer AGS New Media.
The result is that while the number of internet stores in Poland has grown exponentially over the last two years, from just a handful to about 100 now, the average yearly turnover is still relatively low. Revenue for all internet services in Poland came to about zl. 220 million ($56.4 million) last year, according to monthly magazine Teleinfo, although internet access providers accounted for about half of that.
The growth in the number of cyber stores may mean that fewer transactions will take place outside of the country, computer executives said. The prevalence of cyber stores based here means that more consumers may purchase goods at a Polish site, with VAT included, rather than go hunting for another cyber location. That is particularly true for physical goods, which require delivery and therefore must be waited for and could possibly be damaged in transport.
"Most goods I know of, are bought in Poland-based on-line stores," said Tomasz Hipsz, owner of HBZ Internet store, whose site claims to attract 10,000-40,000 strikes per month.
He said that his site's competitive price is not the only reason shoppers congregate there. "It's also due to a shorter delivery time and compatibility with Polish standards."
