Ecommerce has made every web site a multinational operation, at least with respect to certain issues that result from reaching and possibly selling to the whole world. Thus, "offshore" thinking has become mandatory for the ordinary ecommerce business.
"Offshore" Dealings - Offshore once meant the exotic province of what was considered slightly shady activities in strange lands. Certain jurisdictions have been associated with drug trafficking, money laundering, tax evasion and private "bank" and other investment scams. Another questionable use of offshore jurisdictions has been various asset protection trusts (APT) designed to make assets hard to reach by creditors, spouses and others. Legitimate uses of offshore jurisdictions include various kinds of funds, such as setting up offshore investment and insurance companies, especially for self insuring, with less paperwork and regulation and more privacy.
"Screen" v. "Open Outcry." - The immense power of the computer when hooked up to networks had already started to transform capital markets even before the web age. Stock exchanges, once largely confined to "open outcry" systems where traders openly shouted out their competing orders on the exchange floor, have given way to the "screen" systems where institutional and individual traders use their computers to trade in markets around the world.
Partly as a result of the "screen" and the use of computers in management, capital funds have migrated to places such as the Caribbean, making it collectively one of the largest financial centres in the world. Again, the freedom from regulation is one of the most important factors in this migration.
An Offshore Example – The British Virgin Islands (BVI) has been the leader in this area, with its pioneering 1984 International Business Company (IBC) Act and the quality of its services with over 300,000 companies registered there. The BVI has created an "offshore finance" industry as one of the best jurisdictions for legitimate, fund-related businesses. This inviting tropical archipelago, known as the sailing capital of the Caribbean, the BVI has the stability that comes with being a British colony, where the UK remains responsible for the courts and internal security as well as defence and external affairs.
Now the BVI is interested in making ecommerce a "third pillar" in its economy, now powered by tourism and the financial services industry. Not bad for a Caribbean paradise whose economy was scarcely more than fishing and basic subsistent economic activities a scant generation ago.
Enter the Multinational Web Site
Web sites, due to the nature of the web itself, are multinational entities. Since a web site resides on a computer server, there is a great deal of latitude in locating the server.
Right now, ecommerce seems to have money coming out of its ears. However, by the nature of the Internet, ecommerce will foster unprecedented competition and lower prices.
Low cost of entry, plus outsourcing, but especially the electronic aspect of ecommerce, with its automated search and comparison abilities, will foster unrelenting pressure toward lower prices.
A wide range of legal issues pertain to ecommerce, ranging from strictly internet-related issues to a number of traditional issues that apply to regular commerce as well as other activities.
"Offshore" Regulation of Ecommerce - Offshore, in some sense, applies to all nations, since opportunities may be presented anywhere, especially the markets of mature economies. On the flip side is the fundamental question of whether an "offshore" or foreign country can reach a website for asserting its legal jurisdiction.
International Taxation of Ecommerce - Huge items like taxes, considered as costs in this international medium, coupled with the inherent mobility of ecommerce, will mandate global location decisions, already a practice of multinational companies. As a result, the offshore finance centres are being threatened by the major industrial powers, which have begun focusing on "tax competition" by the offshore "tax havens."