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Direct Taxation and E-Commerce is argued that the present international taxation 1 is one of the most important but least studied topics in all of tax; indeed, it may be one of the most undeservedly ignored topics in all of law. 2 One of the reasons the topic is so important in the real world and yet so little loved of scholars is that international tax law is both excruciatingly complex and fundamentally arbitrary. 3 One of the principal reasons for this irrationality is simple: there is as of yet no consensus as to how the tax base represented by the world economy should be shared among the world's roughly 200 nations (Li, Cockfield and Wilkie 2006 pp 375-377). Cur- rently, for the most part, each government decides unilaterally what portion of that base to claim. As a result, some parts of the world economy are taxed once, some twice, some many times, and some not at all. Much of the theory on international taxation that has been developed over the years to address the above issues presupposes that there Furthermore, they rest upon the use of a relatively small number of concepts: (1) the choice of spe- cific principles (e.g., residence and source-based taxation) for governing the tax treatments of both domestic source income accruing to non-residents and foreign-source income accruing to residents; (2) the use of the concept of permanent establish- ment in establishing the economic nexus required to assert jurisdiction to tax business profits; (3) the economic effects of these principles (e.g., their impacts on the worldwide allocation of invest- ments and savings); (4) the application of alterna- tive methods (e.g., tax credits or exemptions) for effecting (juridical) double-taxation relief; (5) the formulation of appropriate provisions (e.g., inter- company transfer pricing rules for multinationals) for the effective implementation of the chosen tax regime; and, finally, (6) the negotiation of bilateral (and sometimes multilateral) tax treaties to allevi- ate the undesirable effects of non harmonized tax