companies are selling their products or services online. Since this is a new medium for commerce and as the global marketing of goods or services is growing enormously, there is a need for redrafting the legal environment suitably. The legitimate revenues to the governments were previously realized through taxes on sales, as applicable under the standard law. This new face of marketing which is termed electronic commerce has once again highlighted the need for creating new laws to safeguard the interests of the customers as well as the manufacturers and revamping the source for taxes to be levied. The changes, which result from electronic commerce and related technology offer significant benefits to business, consumers and government. They increase convenience, efficiency and productivity and reduce costs. It is important to look forward to the changes and how they will influence the current tax laws as they relate to maintaining consistent revenue flows and taxpayer equity.
In the U.S., the emergence of the electronic commerce has left a prominent impact on the telecommunication, information and computer sectors, advertising, publishing and media industries. The issues brought forth by the electronic commerce, which relate to sales tax and use tax, have attracted the attention of the federal, state and local governments. Promoting the growth of internet commerce is inevitable because of its potential in generating revenues and jobs and increasing productivity. However, the state and local governments are dependent on a consistent inflow of revenues to maintain essential services. Sales and use tax account for 36.7 percent of overall tax revenues. There is a need for a cooperative and simplified sales and use tax system to provide for efficient and equitable taxation of interstate commerce. The Internet Tax Freedom Act created the Advisory Commission on Electronic Commerce and this commission recommended that while the internet should not be taxed more than other channels, it should not permit the avoidance of tax. The remote vendors argued that imposition of sales tax collection responsibilities in all of the thousands of the taxing jurisdictions in the U.S. would create an unacceptable burden (Pennsylvania Department of Revenue, September 22, 1999).
The doctrine of sovereign immunity, in international law, permits a court to give up its jurisdictional rights in respect of foreign enterprises or countries. This doctrine has as its bases the traditional notions that a sovereign should not be subject to litigation in a foreign court. The result is that, investors may be unable to obtain relief in their country's legal system. In some countries, this doctrine's application to commerce has been limited.
While, contracting with a private party if a foreign nation does not allow itself to be subject to the local laws, then recourse to U.S. courts in case of breach is not possible. The Foreign Sovereign Immunities Act provides a uniform rule for the determining sovereign immunity in respect of legal actions in the US courts. The provisions of the Act are that under international law, countries fall under the jurisdiction of foreign courts in their commercial activities, and that their commercial property can be appropriated to satisfy the judgments in connection with their commercial activities. Business with foreign partners can result in problems that are not encountered in domestic business. Issues of jurisdiction,