It is indisputable that the development of e-commerce and new business models has allowed all kinds of businesses to change their trading practices in ways that were unimaginable when tax rules were developed. Hence, before I look in detail at the impact of e-commerce on tax systems, it is worthwhile spending a little time on tax policy. This chapter will have a detailed discussion about the policies and principles behind taxation. The question is why do we tax the way we do? What are the political, economic, social and administrative pressures that have contributed to the shape of our tax system?