Emerging legal issues


Apr 19 - 25, 2004





The CBR taxes the Pakistani source income of non-resident individuals and foreign corporations with respect to income that arises from a trade or business, however, Pakistan generally asserts jurisdiction only with respect to "taxable income which is effectively connected with the conduct of a trade or business within the Pakistan.

Moreover, under income tax treaties which the Pakistan has entered into with other countries, the Pakistan generally asserts its right to tax the Pakistani source trade or business income of foreign individuals and corporations only when such income is attributable to a "permanent establishment" or "fixed base" in the Pakistan. The application of these basic principles of Pakistani income taxation to electronic commerce creates a number of problems. First, the question whether a foreign person engaged in electronic commerce is conducting a trade or business "in Pakistan" is difficult to resolve by reference to the traditional criteria for resolving that issue. The concept of a Pakistani trade or business evolved in the context of conventional commerce, which has typically been conducted through identifiable physical locations. As noted above, however, electronic commerce can be conducted through telecommunications and computer links that have no physical connection to the jurisdiction in which the income-producing activity occurs. Indeed, "from a certain perspective, electronic commerce doesn't seem to occur in any physical location but instead takes place in the nebulous world of 'cyberspace. "Consequently, even though a foreign person may engage in extensive transactions with Pakistani customers, and thus clearly be engaged in trade or business, it is not at all clear that such person is engaged in a trade or business in Pakistani at least as that concept has generally been understood.

Second, even if a foreign person engaged in electronic commerce with Pakistani customers is deemed to be engaged in Pakistani trade or business, it may be even more problematic to suggest that such a person has a "permanent establishment" in the Pakistan in the many cases that will be governed by Pakistani tax treaties. A "permanent establishment" is generally defined as "a fixed place of business through which the business of the enterprise is wholly or partly carried on." Since electronic commerce can be conducted without a fixed place of business in the Pakistan, income that might have been subject to Pakistani tax were it earned through more traditional commerce may escape Pak taxation when earned through electronic commerce. These jurisdictional issues have significant implications for the neutrality and administrability principles considered above. If income that a foreign corporation earns through electronic commerce will escape taxation either because it is not effectively connected with a trade or business "in Pakistan" or because the corporation lacks a permanent establishment in the Pakistan, it will offend neutrality principles to tax income generated by competing commerce carried on by foreign persons through conventional. Neutrality considerations would counsel in favor of similar jurisdictional rules for both forms of commerce. On the other hand, even if jurisdictional principles could be developed that would treat economically similar forms of commerce the same for income tax purposes regardless of their mode of delivery, it is not at all clear that such a rule would be administrable. To attempt to enforce a tax obligation against a remote service provider whose contacts with Pakistan are limited to electronic impulses passing through satellite links may exceed even the administrative capabilities of the Central Board of Revenue.


The e-commerce world, to decide question who own the right to legislate, adjudicate and enforce the taxation is most crucial concern. Legislation is first step to ultimate adjudication of the matter, but question arises who can legislate. The selling e-commerce transaction, the purchaser could be from any jurisdiction across the globe, rather the country who own jurisdiction over the purchaser have the right to construct statutory provision for imposition of taxation.

Likewise the seller, physical establishment and data encryption place also arise many tricky and crucial questions concerning the imposition of e-commerce taxation which are hard to answer in the light of scientific advancement of e-technology.


The geographic location of a person vest where that person is a residing, however, physical location becomes almost meaningless when technology exists that enables individuals to carry out almost every facet of life in another jurisdiction while never actually physically leaving their geographic location even for a single day. A person could effectively make thousands of "trips" per year via the information highway to another jurisdiction without ever being subject to a border control mechanism.

The place in which the transaction has been taken place, the seller and buyer jurisdiction and location is primary principal on which the taxes can be imposed, but the location of the transaction is most formidable task.

The location of parties where they are residing, it could in within specific country jurisdiction or it could be any where, the parties are residing that arises the multi-jurisdictional issues.

Where the data encryption has been taken place, jurisdiction issues arise there, as we could understand the matter, because of e-commerce transaction, the location of parties difficult to deduct, under given circumstances, because of factors which I understand are how to configure out the exact location of the parties unless the ISPs and web hosting sites are not monitored?


Challenging for the policy maker to stop evasion and imposition of fair taxes on e-commerce transaction, but when the multi dimensional issue are invoked that could lead to imposition of double taxation or evasion of taxes. Unless the international co-operation is not sought to adopt desirable policy for the imposition of taxes, that can lead to imposition of double taxation.


Currently, for most taxes there is a legal requirement on a business that wishes to store records electronically to obtain specific permission from taxing authorities. The approval is given subject to compliance with conditions specified by Revenue. The advent of e-commerce is likely to accelerate the trend for business records to be held electronically. Indeed, it is possible that some traders through a lack of knowledge of the legal requirements are already storing records electronically without CBR approval. In current conditions the need for CBR approval for the storage of records electronically may be outmoded. To have confidence in the processes and methodology used to store records electronically, CBR could simply retain the power to promulgate acceptable standards of electronic record keeping for tax purposes. Legal changes to this effect should be considered urgently.

So what threat, if any, does electronic commerce pose to the right of privacy? Personal databases of customer information allow businesses to tailor their marketing strategy to suit the individual and pinpoint the type of person they wish to target. Problems arise when that company chooses to share the data with someone to whom we have not chosen to give data or when details are taken without our knowledge.

Technologies such as data mining have made it possible to use information much more productively. Misuse of personal data is not something that is limited to electronic commerce; we provide a great deal of information to various organizations on a daily basis. Again, a phobia about electronic commerce makes an appearance. Many high street stores provide in customer loyalty cards, with which our purchases can be monitored and we receive details of the latest offers, which might interest us. Why should information taken from web sites regarding our buying preferences be treated so differently? The online equivalent of a store loyalty card is a cookie. The disturbing fact about cookies is that they have been designed to operate without the user knowing they are there thus, could be said to be an invasion of privacy.

Cookies are tiny pieces of data which are sent by web servers and which can be placed on the user's system for later retrieval. Cookies may be used perfectly innocuously, for example to find out if a visitor to a web site has been there before and thus show customized information. However, cookies placed on your computer may be combined with malicious JavaScript or other code or may be designed in such a way as to reveal other sites your computer has visited, allowing marketers to attempt to create a picture of your interests and lifestyle. Cookies can be disabled, but this has implications for interaction with the web site as messages constantly appear asking the user to enable the cookie, thus wasting time and money.

If consumers do not have control over the collection and use of their personal data, electronic commerce will facilitate the invasion of their privacy. Although several groups concerned with privacy have objected to the use of cookies there appears to be little chance of their use lessening in the immediate future.


The record can be hosting at any jurisdiction, and application of retention and maintenance of record often arise legal issues which could only solved according to prevailing laws of the web hosting sites.

But there is no specific statutory provisions are available for defining issues mentioned above. There must be appropriate legislation embodiment for record keeping and maintenance of the record of web server, if the construction of statutory are not available that could provide ample opportunity for the tax payer to avoid the taxes.

The record keeping in electronic record only kept in net place within the premises of the business that can be easily accessible by the tax officer but real issue arise for ascertaining the taxable record of the sellable goods hosted in remote web server collection taxes.


There must be substantive provision, which could frame time and limitation in which the electronic record could be kept. Although the electronic records can be kept for more than one form but the application of the substantive provisions for the retention of record are difficult to implement them.


There are legal stands in the way for justice adjudication of legal issues is production of record before the courts, the way these records can be placed and who is going to certify the electronic record? The legislative construction of statute must provide the legal framework for resolving these legal issues so that just adjudication can be pronounced for settlement of e-records disputes.


There must be some authority which could certify the record kept by the tax payer, the establishment of authenticated authority is an essential for authentication and verification of records, no certification body has not yet established, although it has been proposed in Electronic Transaction Ordinance 2002.


There must be minimum standard for the protection of records, the types of software used should be used? What type of measures should be taken for maintenance and destruction of e-records? The standards of liable must also be described in appropriate form so that the records can be kept appropriate electronic forms.


To assess the records at hosted remote retained out of the jurisdiction of Pakistan root many legal issues which are needed to be addressed. Hereinafter there is description of the emerging legal issue of access to e-records.



The access to record in electronic data is one of most difficult issue where record has been kept in remote hosting place which requires authorization and permission of the taxpayer and web hosting site.

The statutory provision of section 25 of the sale tax the phrase 'electronic data' has been used to get access to database of the record but no specific direction is available.

Look at the section 25 of Sale Tax Act 1990 "...A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by an officer of Sales Tax, produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to such officer of Sales Tax and use of any machine on which such data is kept."

The detail provisions in section 175 income tax ordinance 2002 regarding access to e-records, "...In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section (a) shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer;... (d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required..."

These provision has reproduced at length of the Income Tax Ordinance 2001 for getting access to the e-record but the statute is itself is silence on the point of record of business which has been conducted by e-commerce, how the computer can be accessed by tax officer which has uploaded at remote web server, in light of this fact it can be easily concluded that these legislative construction are inadequate.

The legislative construction are more strict and explicit in defining the right to access of the tax officer for purpose of verify of record but as comparison with the Sale Tax Act 1990, where the statutory detail is missing.

The section 18 of Central Excise Duties Act 1944 runs as under, "...Search made under this act or any rule made there under carried out in accordance with provisions of the code of criminal Procedure (V of 1898), relating with respect to search and arrest made under this code."

There is also required the reconstruction of the statute of rule 96 of central duties rules 1945 regarding the special procedure for imposition of central excise duties on services. The criminal procedure itself is ineffective before the emerging issue of the e-commerce transactions.


The term "computer hacking" traditionally describes the penetration into computer systems, which is not carried out with the aims of manipulation, sabotage or espionage, but for the pleasure of overcoming the technical security measures. In practice, this kind of offense can be frequently found. As far as damage is concerned, a differentiation must be made. In numerous cases, the attacked computer user is not actually harmed, but only endangered. Contrary to this, considerable damages occur in other cases especially when the perpetrators later use their knowledge for committing espionage and sabotage. In any case the "formal sphere of secrecy" or the integrity of the concerned computer systems is violated. Also it is very tough to draw a dividing line between what can be considered mild and what endangers life. Consider someone breaking into the online flight system of an Pakistan Airlines flight. He or she is definitely endangering the lives of those on board though it may have been done for fun's.

To get access and verify the record being hosting in remote services often requires the use of hacking to get access to records. The use of hacking as legal tools requires use of hacking soft wares with most modern technology and means employed to curb any evasion of tax and verify the e-record.

No specific statutory provisions are available for the defining the authorized hacking rights on the part of tax officer.


In numerous Western legal systems, the first "computer-specific" reforms of law during the 1970s and 1980s concerned the protection of personal rights and privacy in particular. The relevant legislation was a reaction to new challenges to privacy by the increasing possibilities of electronic data processing to gather, store, connect and transfer personal data. The traditional provisions for the protection of secrecy only covered part of the personality right and proved to be far too narrow for a protection against the new dangers. A differentiation in criminal data protection law which can be found in all countries today results from this historic development: Traditional offenses for the protection of secrecy (e.g. for doctors, lawyers or public officials) can still be found in the core of criminal law, i.e. the Criminal Code. Personal data receives indirect criminal protection by general criminal provisions that are not limited to personal data. We can therefore speak of an international wave of reform, which clearly shows the common problems of all national legal systems.

There are often immunity is provided against disclosure of information relating to security procedure, no person shall be compelled to disclose any password, key or other secret information exclusively within his private knowledge, which enables his use of the security procedure or advanced electronic signature shall not confer any immunity where such information is used for the commission of any offence under any law for the time being in force.

The most formidable task is getting access to remote data is the shelter being provided by the remote hosting site for maintenance of the privacy and security of the database. The right to breach the security right as statutory is not possible in case of hosting of data at remote server, unless the tax payer be compelled to facilities the access to e-data.


With conventional commerce original records are paper-based and can be examined for the attributes of authenticity and integrity. Since, with e-commerce transactions, the original documents are stored in electronic form the comfort of physically viewing the originals knowing that they are unaltered does not exist. However, software is being developed to identify alterations to computer records. Specific accounting software may also be deployed for this purpose. Many of us in the workplace feel more comfortable with paper-based records. But is this comfort an illusion? Paper records can be altered, lost or falsified. So too can computer records. The fact is that we are familiar with the tools and procedures for checking paper records. Whereas, he tools for validating computer records are new and, perhaps, less intuitive. Revenue authorities are likely to reach a number of conclusions to do with this over the next few years:

Computer audit means more and different training of staff.

Once staff is trained, computer audit will have advantages over traditional audit in terms of speed, precision and flexibility. It will be seen as the only way to audit large companies, in particular.

Computer audit will make it easier to examine both accounting systems and the records which go to make up those systems. Overall, it is not the fact that records are paper or computerbased that matters.

What matters for Revenue is that businesses more likely to perpetrate tax fraud are identified through correct risk analysis. This does not depend on the nature of the records as between paper-based and computerized. In conclusion, Revenue auditors will require a higher level of computer skills in future to allow accurate interpretation of computerized records systems. It will also be necessary for Revenue auditors to have systems analysis skills to validate the data models used in a given accounting environment. They will also need manipulation skills to accurately trace transactions through such systems. The computer software industry is aware of potential for loss of audit trail arising from business being conducted on the internet. As mentioned already, the industry is developing techniques to ensure the integrity of electronic records. An example of this is a technique called "message digests". A message digests works by attaching a unique message to an electronic record. Any subsequent change to the record can be detected by comparing the original digest with a newly created digest based on the current state of the file data. Once again we see an emerging overlap of interest between the public and private sector; both are keen for e-commerce to work well and both face common problems. The point has been well made that the private sector, particularly the auditing profession, has the same interest as tax auditors in safeguarding the integrity of e-commerce records. One area of focus is the impact of significant electronic processing of information on the auditor's ability to rely on substantive, observable evidence in the conduct of an audit.


Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This concept is recognised in all tax statutes, which siets out taxpayers' primary obligations, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.

Disclosure in this context serves two main purposes. First, it is necessary to provide information for audit selection. Secondly, disclosure is relevant to the issue of the abatement of penalties.

Taxpayers have a statutory obligation to disclose to the Commissioner in a timely and useful way all information required to be disclosed under the tax laws. Disclosure here covers items specifically required to be disclosed by statute, and items for which disclosure is required by the Central Board of Revenue Department. For income tax, under section 26 of Sale Tax Act 1990 and 114 of Income Tax Ordinance 2001, the departments requires a complete statement of the taxable income of the taxpayer for the preceding year, together with such other particulars as may be prescribed. The department's disclosure expectations cover any requirements set out in a particular tax return, in the guide accompanying a particular tax return, or matters for which a specific disclosure form is prescribed.

In the area of tax returns and compliance, electronic commerce may create new variations on old issues as well as new categories of issues. These developments require that practical techniques be developed to deal with these technological innovations. These technological developments touch on a wide range of issues affecting the filing of tax returns.

Electronic commerce is still developing and no electronic money system has yet achieved widespread usage. Nevertheless, it is important to consider these issues now since some issues may require that the needs of filing and providing of tax returns be considered tax returns be addressed while electronic commerce systems are still under development, the filing of tax return of e-business and furnishing evidence. Commerce on the Web can actually facilitate compliance with consumer disclosure requirements.


A New Yorker cartoon once featured two dogs sitting in front of a computer with a caption that read "[O]n the Internet, nobody knows you're a dog." Tax administrators face a similar issue.



Under clause (a) subsection 1 of section 114 of Income Tax Ordinance 2001 has make it obligatory on Every person and company regarding filing of the tax return, "...subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely (a) Every company and any other person whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year;"

Under section 26 of Sale Tax Act 1990 has make it obligatory on every person and company regarding filing of the monthly tax return, "...Every registered person shall furnish not later than the due date a true and correct return in the prescribed form to a designated bank specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed".

Under section 26AA of Sale Tax Act 1990 has make it obligatory on every person and company regarding filing of the Retail tax return, "...Every person required to pay turnover tax shall furnish a true and correct return in the prescribed form to the Office of the Collector having jurisdiction indicating the value of supplies made in tax period, the tax paid and such other information as may be prescribed."

Identification of the parties to a transaction is a necessary first step in determining what the tax liability is for the transaction and who is liable for any tax payable. In relation to e-commerce, special difficulties are presented. Where business is done through a website the tax authorities must be able to link the website with the "real world" physical parties behind it. A website can easily conceal the true identity of the person benefiting from any business it does. On the Internet it is possible to use a false identity and it is not currently possible to independently verify a party's identity. This raises a number of issues because the identity of counterparty is important for numerous tax provisions.

Similarly, unless tax administrations actively look for signs that existing businesses are involved in e-commerce the existence of a website could remain undetected. Furthermore, websites can quite easily be set up offshore or offshore websites can "front" onshore business. It is imperative for Revenue to encourage voluntary disclosure of websites used as part of the selling and, possibly, distribution functions of a business. As a modest first step, tax forms will need to be changed to ask about e-commerce and to get the website address of any business selling on the Internet.

Finally, how the tax returns and other documents are to be attached as provided in tax provisions.


The developments in electronic payment systems have the potential to create "electronic money." Electronic money is a broad term, and just as electronic money systems differ in their technical features, they atso differ in the extent to which they create issues for tax returns. Depending on the type of system used, electronic money can be either an advantage or a disadvantage for collection of taxation.

The use of electronic cash as a means of transacting internet business may prove to be an acceptable alternative to credit card payments. It is reported that the withdrawal of major players from the attempt to develop e-cash is a significant setback. "...The use of digital or electronic cash in e-commerce transactions could lead to difficulties for Revenue auditors. Revenue auditors have traditionally had to grapple with the lack of controls associated with the cash economy. The increasing sophistication of business transactions and the development of a variety of payment methods have meant that cash payments have become a diminishing feature of business transactions."

The electronic money poses a tax evasion potential similar to that created by paper money. This raises the issue of whether the evasion potential is manageable and what must be done to manage it. It is possible that the techniques that have been developed over time to combat evasion using paper money can be adapted and expanded to combat evasion through electronic money.

The Electronic money creates opportunities to deposit unreported income in a bank or other financial institution. As a result of electronic money's advantage in transmitting large amounts of money with relative ease, combined with the continued use of cash, the problem of an underground, unaccounted for economy is likely to be exacerbated.

Electronic money and the Internet substantially increase the ease and safety with which bank accounts can be opened abroad, letterbox companies and trust accounts can be established abroad, and funds transferred anonymously. Such accounts are, of course? subject to the reporting requirements for foreign financial accounts.


Verification of identity is also a problem for consumers, who want to be assured that the persons with whom they do business are who they claim to be. As a result, companies engaged in electronic commerce are developing "digital certificates" or "digital IDs" that can be used to verify a person's identity over the Internet. "Digital certificates" are issued by a trusted intermediary who verifies the identity of a person and performs appropriate background checks, depending on the level of assurance to be granted. The simplest level verifies that an e-m' ail message was sent from an indicated address. The next level verifies the digital ID holder through online identity verification against a consumer database. The highest level requires that the holder personally appear before a notary public to have a digital ID application notarized. Once a person's identity has been verified, the certificate is created using public key encryption techniques' which makes it independently verifiable by the recipient and Immune from tampering it.


Under clause (a), (b) (c) (d) subsection 2 of section 114 of Income Tax Ordinance 2001 has make it obligatory on every person and company regarding providing evidence of the records, "...A return of income (a) shall be in the prescribed form; (b) shall state the information required by the form, including a declaration of the records kept by the taxpayer; (c) in the case of a person carrying on a business, shall include an income statement, balance sheet, and any other document as may be prescribed for the tax year; and (d) shall be signed by the person or the person's representative."

The validation of the details of any business transaction requires an ability to follow a similar audit trail as that which exists for conventional commerce. The following elements must therefore be present access to the basic records related to a transaction must be available; and the integrity of those records must be authenticated. Taxpayers are required to keep accurate books and records, which are subject to examination by the income tax authorities in order to verify the income and expenses reported on the taxpayer's return.

"...Although many taxpayers rely on computerized record keeping systems to a large extent, many transactions still originate as paper records which can be used to verify the accuracy of the electronic records. However, for taxpayers engaged in the sale of electronic goods or services, no paper records are likely to be created because customer orders are placed and fulfilled electronically and therefore the only record that exists of these transactions could be an electronic one. As all users of computers know, this creates the possibility for tax evasion and fraud because computerized records can be altered without a trace."

The "digital notarization" systems have been developed which are intended to make it possible to verify that electronic documents and records have not been altered. Public key encryption also permits a taxpayer to encrypt his financial records to prevent their examination on audit. It would seem that this should be treated no differently from failing to keep or destroying paper records. Even taxpayers engagel1 in the sale of physical, as opposed to electronic, goods may soon receive orders and issue invoices electronically. Electronic "documents't must be verifiable in order to minimize the potential for tax evasion.


These are many factors which can lead to evasion the collection of the e-commerce taxation. The section starting from 108 to l12 has enunciated in Income Tax Ordinance of 2001 are related with the anti-avoidance measure that could be adopted by the commissioner for the purposes avoidance of the taxes. In spite of fact that the anti avoidance provisions are available for curbing the avoidance of the taxes but the legislate provision are not sufficient to meet the complexities of ecommerce transaction owning to following factors.

Thus far we have examined the Internet's impact on existing taxation frameworks on the assumption that any transactions conducted over the Internet would be to some degree either self-reported or within the investigative and enforcement powers of revenue authorities. This however is not always the case. In fact, the special characteristics of the Internet, i.e. its lack of central control, combined with its international reach make it very difficult, if not impossible, to regulate the vast amounts of money that are expected to travel through it. The Internet is used for tax avoidance and other criminal shifting of income.

The web server could be located any where, irrespective of fact that transaction has been taken place, the remote web server location provide easy room for the concealment of the identity of the transaction.

There is very ineffective construction of section 108 of Income Tax Ordinance regarding the question of transaction which has realised in an arm's length transaction."...The Commissioner may, in respect of any transaction between persons who are associates, distribute, apportion or allocate income, deductions or tax credits between the persons as is necessary to reflect the income that the persons would have realised in an arm's length transaction."

The strict construction statute with intrinsic aid of appropriate phrases conveys exact meanings that can lead to exact interpretation of statute according to intention of legislatures. The transaction has been conducted by e-commerce means requires substitution of texts which could embody the scientific mechanism into statutory provisions.

The Sub-section 3 of section 111 of the Income Tax Ordinance related with the anti-avoidance policy, the authority has been vested on the commissioner to question the satisfactory account of the expenditure of the account of other resources. "...and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory, the amount credited, value of the investment, money, value of the article, or amount of expenditure shall be included in the person's income chargeable to tax under head "Income from [Other Sources"] to the extent it is not adequately explained."

Hiding Identification of the parties to a transaction, in particular the taxpayer The taxpayer can hide the identity of parties by tampering the database the website, where it has been uploaded.


Where the declared value of any investment, valuable article expenditure of a person is less than the cost of the investment or valuable article, or the amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person's income chargeable to tax under the head "Income from [Other Sources"] in the tax year in which the difference is discovered.

The deletion of the database is possible within fraction of the moment, which could provide enough opportunity for the tax payer to tamper with the record of the transaction in remote server and evade imposition of taxation.


Look here the power has been restricted under the section 94 of C of Cr.P.C. (Act V of 1898) for getting access to banking records, "...Provided that no such officer shall issue any order requiring the production of any document or other thing which is in the custody of bank or banker as defined in Banker' Evidence Act, 1891(XVII of 1891), and relates or might disclose any information which relates to the bank account of any person except..."

The first and lesser problem relating to the regulation of Internet commerce for tax purposes is the uncertainty of whether current laws will even apply to financial transfers on the Internet. By requiring very specific documentation of every transaction the government can attempt to extend the regulations that apply to paper based banking into "cyber banking". Nevertheless, it appears that this legislation will primarily be targeted at technology such as automatic teller machines and wire transfers, but will not contemplate newer banking applications such as the Internet. For example, the requirements that consumers receive receipts and periodic statements reflecting electronic transfers of money do not make sense when applied to stored-value cards that operate independently of a bank account. Stored value cards will likely replace cash to a significant degree as we move towards an increasingly paperless society.