Revenue services, lawyers and human resources are all grappling to come to terms with the Internet legislation, revealed a Nedbank e-commerce workshop yesterday.
Jose Faria, a legal officer with the United Nations, discussed how the United Nations Commission on International Trade Law has established a model law for governing Internet transactions in an attempt to bring about international consistency.
"The model law deals with making an electronic message as reliable as paper, which leaves a tangible record," he said. "The model law contains principles that each legislature can adapt to its own legal system."
Some of the issues that the law tackles include the parties` location in cyberspace, at what point a contract is formed, electronic agents and allowances for error. Faria said that while SA is partially aligned with the model law, it still insists on a handwritten signature to validate a contract.
Death and taxes
With the value of Internet transactions forecast to top $6 000 billion in trade in 2004/5, according to speaker Andrew Masters, South African Revenue Service legislative research manager, it is little wonder that global governments are getting excited about this distribution channel.
The US treasury states: "In the world of cyberspace, it is often difficult, if not impossible, to apply traditional source concepts to link an item of income with a specific geographic location. Therefore, source-based taxation could lose its rationale and be rendered obsolete by electronic commerce. By contrast, almost all taxpayers are resident somewhere."
Masters outlined some of the areas that government has taken under consideration. He pointed out that this outlook was one of the drivers for the South African switch to the residence-based tax system in January 2001.
It has also become necessary to define a permanent establishment (PE), which allows for taxation within SA, in terms of cyber tax laws. "A Web site alone cannot be a PE, Web hosting arrangements do not result in a PE and human intervention is not a requirement to constitute a PE," said Masters. "However, a server at the disposal of an enterprise can constitute a PE, if the enterprise carried on business functions through the server for a sufficient period of time and the functions performed are an essential and significant part of the business activity."
Employment practices
Peter Le Roux, Brink Cohen Le Roux director, covered employment practices in the Internet age. Contrary to the ongoing furore surrounding employees` rights to private e-mail and Internet access in the workplace, he said: "This issue has been over-debated in legal circles. Nothing important has changed except the technology."
He said that all the same questions still apply to the process for assessing poor work performance. "You are entitled to regulate employee conduct, but the courts will still ask if the rule was reasonable, and should have resulted in dismissal."
By the same token, he assured that employees will be judged against equally reasonable measures. "If an employee goes to the courts and says, 'I didn`t know that I wasn`t supposed to download pornography in the workplace,` the judge will send him away."
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