It is coming so fast, yet we are not prepared for it. Such summarizes the sentiments of the Philippine tax experts on the onset of electronic commerce - doing business without paper - in a forum on taxation policies. Participants in the forum held by business and tax organizations, including the Bureau of Internal Revenue, the Philippine Chamber of Commerce and Industry (PCCI) and the international Study Group for Asian Tax Administration and Research (SGATAR), agreed that the country's present tax regime will face significant challenges in adopting to e-commerce.

The first issue the country's tax agency faces in the potential loss of revenue due to more efficient business transactions, said Graham Holland, Commissioner of Inland Revenue of New Zealand.

This is shown in the increasing delivery of services and products like computer programs through the Internet. Products delivered in such a way goes from the producer directly to the buyer - in the processing skipping traditional taxes and customs duties that accompany traditional transactions.

"We all need to continue to look at our existing legislation and our interpretation of it to see how robust it is for products and services which cross-geographical boundaries and where the product or service itself is entirely in electronic form." Mr. Holland said.

"E-commerce involves making location almost irrelevant, (and involving) questions of who to tax and where to tax," said Miguel Andaya, senior vice president of the Institutional Banking Corporation." In the electronic world, there will only be two players: the end-user and the supplier, who could be abroad," Mr. Andaya said. E-commerce should not be seen as avoidance of taxation but rather, "that the world is changing and becoming more efficient. Tax collection will suffer but not from malicious reasons," he added.

Mr. Andaya said the tax authorities "should not look for ways and means to tax (e-commerce), (and) not to discourage efficiency. There should be some care before trying to tax electronic transactions, or thinking of alternative taxes."

Forum participants also admitted the present tax regime, including the new and proposed laws in the Comprehensive Tax Reform Program, does not take e-commerce into consideration.

"One reason is, most of our laws are based on paper," said Florecita Flores, vice president for advocacy at the PCCI. She said she has prepared a study on the revision of present laws "to accommodate e-commerce." The study includes proposed laws but is yet to be presented to legislators, she added.