Small firms are ignoring e-commerce shows new study.
TELECOMWORLDWIRE-(C) 1994-9 M2 COMMUNICATIONS LTD A new study by KPMG and Demon Internet, a UK-based ISP, has found that small UK firms are ignoring the implications of electronic trading. A survey of 300 businesses with turnovers between GBP2m and GBP20m found that while four out of five small UK firms believe their products or services have e- commerce potential, most have not investigated the tax ramifications of their venture into e-commerce. Most respondents indicated that they tended to look at the issues of security, price transparency and competitors in preference to tax and were already using or planning to use the Internet for communication with customers and suppliers, marketing and market research. A spokesperson for KPMG said, however, that there are many tax issues at stake including opportunities available relating to setting up certain e-commerce activities offshore, VAT planning and the applicability of withholding tax to Internet transactions. KPMG also warned that small companies marketing over the Internet should be wary of allowing demand to outstrip their ability to supply and to prepare for this potential eventuality.