PARIS -- Talk about the information technology revolution is everywhere. Electronic commerce is taking off, financial institutions are trading online, and schools are holding class on the Internet.

People can now move information so quickly and easily across national boundaries that the drafting of international e-commerce rules has become an urgent task for the global market.

And the Organization for Economic Cooperation and Development is at the center of the issue.

Simon Woodside, head of electronic commerce at the OECD's Fiscal Affairs Division, said the Paris-based group is currently studying different ways of collecting consumption taxes on music, movies, games and other software purchased and downloaded from the Internet.

"Indirect taxation has been seen as a very domestic issue because, in a sense, you didn't have the opportunity to buy from outside your jurisdictions," Woodside said in a recent interview with The Japan Times. "But the Internet offers much greater opportunities for you to do that."

"So that's why there is a recognition, in the OECD environment and I think probably more widely, that you need to think about at least the framework of rules," he said.

The OECD estimates that e-commerce was worth about $80 billion in 1998 and may grow to some $3.2 trillion in 2003.

Under the OECD's existing rule, taxation of physical goods purchased through cross-border Internet trade should occur in place of consumption, meaning taxes are levied when merchandise passes through customs.

However, there is no international rule applicable to levying consumption taxes on services and digitized goods traded through the Internet.

Woodside said four basic ideas have been considered for taxing digitized goods.

The first is "Self-assessment," in which consumers voluntarily report purchases of digitized goods and pay taxes on them to authorities in their jurisdiction.

The second is "Registration of Suppliers," whereby tax authorities in each nation oblige foreign suppliers to register so that taxes can be directly collected from them.

The third idea is the "Use of Financial Intermediaries," an arrangement in which credit card companies collect taxes and transfer them to tax authorities in the consumers' country of origin.

The fourth idea is "Tax at Source and Transfer," whereby authorities on the suppliers' side collect taxes from them to send to authorities on the consumers' side.

"None of these win very clearly," Woodside said as he explained the difficulties in making these ideas work.

The problem with self-assessment is faith. Would consumers actually report their purchases to tax authorities?

"There is a basic compliance problem with that type of approach . . . because (consumers) simply wouldn't tell anyone," Woodside said.

The registration approach is more conventional but lacks incentive. In the world of e-commerce, companies do not physically go into foreign countries and open up shops, Woodside said. And how does one enforce and monitor registration systems?

Asking credit card companies and foreign governments to collect taxes poses the simple question of whether governments can win their cooperation.

"I can find a lot more disadvantages with all of them than I can find advantages, and that's the real dilemma we're debating right now among governments, and with business communities," he said.

It has been reported that European countries, which charge high value-added taxes, favor taxation of e-commerce. U.S. businesses, however, are opposed to the idea because they fear it might weaken the momentum e-commerce is gaining.

The amount of digitized goods sold online is still "a very small portion" of overall consumption, Woodside said. Setting rules, however, is important not only to prevent loss of tax revenue, but also to prevent what he calls distortion of competition.

"If you let this go on with no clarification of how there should be equal tax treatment," he said, "then plainly, you are discriminating against domestic suppliers of the same things (sold over the Internet tax-free)."

The OECD will make a short progress report on e-commerce tax issues at its ministerial meeting in late June. The first full-size report will be submitted, possibly with recommendations, to its Committee on Fiscal Affairs, in January 2001.