For avoidance of double taxation CBR has conducted various tax treaties with other Countries for defining Pakistan tax jurisdiction in matter connected with imposition of taxation. There are certain treaties which CBR has conducted other countries for defining the right to tax the Pakistani source trade or business income of foreign individuals or any other source and corporations only when such income is attributable on the principles of ?permanent establishment" or "fixed base" in the Pakistan. When we intend to apply these principle of taxation in electronic commerce, there emerge many legal issues which our tax administrative department or adjudicative system is not position to resolve complexities and technicalities caused by advancement of information technology. The application of our tax laws to Pakistani income derived by electronic commerce has caused our tax statutes ineffective neither their construction nor interpretation help in resolving these legal issues.

First, the legal issue whether a foreign person engaged in electronic commerce is conducting a trade or business "in Pakistan" is difficult to adjudicate by reference to the traditional criteria of imposition of taxation. The trade or business which is conducted in the jurisdiction of Pakistan evolved in the context of trading methods of interpretation of law provisions because application of law provisions where the identification of parties to transaction or business are identifiable physical locations but the technological advancement of electronic commerce has made it possible for parties to conduct transaction log in any jurisdiction without having any presence there. In above conclusion it can be said that electronic commerce allows the business concern to conduct through telecommunications and computer links that have no physical connection to the jurisdiction in which the income-producing activity occurs.

Secondly when any foreign person is conducting business is Pakistani customer who are residing in Pakistan but the question of permanent establishment of these foreign person in their territories are still matter of concern legal adjudication of dispute for imposition of taxation on these transactions. In other words a foreign person engaged in electronic commerce with Pakistan customers is supposed to be engaged in Pakistani trade or business; it may be even more problematic to adjudicate a matter that such a person has a "permanent establishment" in the Pakistan in the many cases that will be governed by Pakistan tax laws and treaties. The concept of permanent establishment implies anything which is fixed and attached to earth as a fixed place of business through which the business of the enterprise is wholly or partly carried on. The legal issue which are encountered in electronic commerce are that concept of permanent become obsolete because in number of delivery of goods and performance of services are done without anything attached to earth. These jurisdictional issues have significant implications for the neutrality and administrability principles for imposition and adjudication of tax issues. If income that a foreign corporation earns through electronic commerce will escape taxation either because it is not effectively connected with a trade or business "in Pakistan" or because the corporation lacks a permanent establishment in the Pakistan, it will negate the principle of neutrality earned through tax income generated by trade which are earning in competing market businesses and further offend basic principles on that commerce is itself is carried out. Neutrality considerations favor of similar jurisdictional rules for both forms of commerce conventional and electronic. On the other hand, even if jurisdictional principles could be developed that would treat economically similar forms of commerce the same for income tax purposes regardless of their mode of delivery, it is not at all clear that such a rule would be administrable. The power to enforce the tax obligation in case where the tax payer presence can only be connected through remote server who are not falling in Pakistan or any effort on part of CBR to administrate or adjudicate on electronic commerce of remote hosting server who can only be connected by wireless means, it can be easily concluded that these enforcement of orders are beyond the power and jurisdiction of Central board of revenue.

Jurisdiction in cyberspace without any physical existence

The jurisdiction often is vested in authority to impose taxation where subject matter situates or where parties are residing. Jurisdiction of law traditionally defined as the geographical boundaries within where a law or set of laws are enforceable. The jurisdiction often vests in authority to impose taxation on the transaction of sellable goods and services rendered in the territorial boundaries of the country. The concept of the jurisdiction to impose taxation was not difficult question before the e-commerce transactions have started in cyberspace which have no physical existence and location. The scattered individuals across the world conducting the e-commerce transaction without having any locus point of establishment. Where the encryption of data has taken place, rather the right to impose tax to be vested in place of where encryption of database has taken place or where the physical establishment is there. The world adjudication on electronic commerce taxation dispute is bifurcating on this particular point.

Legal issue of Jurisdiction to legislate, Adjudicate and enforce

The e-commerce world, the question who own jurisdiction to decide question who own the right to legislate, adjudicate and enforce the taxation is most crucial concern. Legislation is first step to ultimate adjudication of the matter, but question arises who can legislate. The selling e-commerce transaction, the purchaser could be from any jurisdiction across the globe, rather the country who own jurisdiction over the purchaser have the right to impose taxation and to reconstruct statutory provisions for same purpose. Likewise the seller physical establishment and data encryption place also arise many tricky and crucial questions concerning the imposition of e-commerce taxation which are hard to answer in the light of scientific advancement of e-technology.

Multi dimensional location of Transaction

The geographic location of a person vest where the tax payer is a residing, however, physical location can not appropriately interpreted in light of present tax statutes when technology exists that enables taxpayers to carry out almost every e-business transaction into another jurisdiction while never actually physically leaving their geographic location even for a single day. Most crucial concern for the tax authorities is that a tax payer or customer can made effectively thousands of login into e-pages in moments via the World Wide Web page or other electronic communication means highway to another jurisdiction without ever being subject to a border control mechanism .

The seller and buyer jurisdiction and location is primary principle of imposition of taxation, but to figure out the location of the e-transaction is most formidable task.

The location of parties where they are residing, it could in within Pakistan tax jurisdiction or it could be any where, the parties? residence arise the multi-jurisdictional issues.

The issue of jurisdiction has been defined in Sale Tax Act,1990 , which has considerably has followed the definition of jurisdiction based on the territory and place of transaction as has enunciated in sale tax the ?in Pakistan? implies any thing within the territory of Pakistan.

"...taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him".

Like wise the central excise duties Act 1944 also remained adhere to the jurisdictional issue to the definition of ?in Pakistan? which are considerable important to look at the wordings of statutory construction.

"...as on all excisable services, provided or rendered in Pakistan as and at the rates, set forth in first schedule."

There is liberal definition of the statute is available in income tax ordinance 2001, let us look at the definition which has been enunciated in the income tax ordinance.

"...Subject to the provisions of this Ordinance, the total income, in relation to any assessment year, or a person,- (a) who is a resident, includes all income from whatever source derived, which- (i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or (ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year; or (iii) accrues or arises to him outside Pakistan during such year; (b) who is a non-resident, includes all income from whatever source derived, which- (i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or (ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year;?

Where the data encryption has been taken place, jurisdiction issues arise there, as we could understand the matter, because of e-commerce transaction, the location of parties difficult to deduct, under given circumstances, because of factors which I understand are how to configure out the exact location of the parties unless the ISPs and web hosting sites are not monitored?

Issues of Evasion of taxation and imposition of double Taxation

Challenging for the policy maker to stop evasion and imposition of fair taxes on e-commerce transaction, but when the multi dimensional issue are invoked that could lead to imposition of double taxation or evasion of taxes. Unless the international co-operation is not sought to adopt desirable policy for the imposition of taxes, that can lead to imposition of double taxation.