EU Moves Towards E-Commerce Taxation
According to an Associated
Press report, the European Union is moving towards an agreement on e-commerce
taxation after the sole opponent to the legislation, the United Kingdom, withdrew
its opposition to a tax on video downloads and other digital products purchased
and delivered via the internet. Britain withdrew its opposition
to the law following an agreement to revisit and streamline the legislation
in three years time, but the agreement must be formally drafted and approved
at a forthcoming meeting. EU member states will then have 18 months to incorporate
the directive into national law. However, despite the moratorium
on internet taxation in the States, the implications of this European decision
for US businesses could be huge, as they are by far the largest providers of
the goods targeted by the new legislation. In response to pressure
from American lobbyists, the European Union has decided that non-EU businesses
will only be obliged to register in one member state, as opposed to in all fifteen
of them. That country will then collect the VAT on the purchases and remit it
to the purchaser's country of residence. However, there are fears that this
could cause complications in terms of additional administration and compliance,
as VAT rates vary widely across Western Europe. .
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