The chorus of disapproval coming from the US against the EU's proposal to tax digital downloads to consumers has been joined by companies inside the EU.
Leading German daily newspaper Die Welt reports that the German business world has come out strongly against the EU Commission's proposals to tax consumer purchases of digital goods on the Internet. The proposals, announced last week, would make supplies of downloadable goods (eg software) into the EU from foreign suppliers taxable, by compelling the suppliers to register in one EU country and account for all EU consumer sales through that country.
Heavy criticism has been expressed by politicians and representatives of the business world in Germany against the new regulations. They say that traders would have to distinguish between private and corporate customers in calculating the amount of VAT to be collected. For internet companies the new measures are too complicated and would involve considerable extra expense.
The newspaper quotes Oliver Kohler, an executive manager at the Munich-based internet services provider smarterwork.de, as saying that it would also be virtually impossible for the tax authorities to ensure compliance with the new system. In the US there is no special tax placed on internet trade.
Critics of the measures say that European trading companies would suffer if the proposals are implemented; there is a growing consensus among business leaders that there will eventually have to be a global tax on Internet sales
Although it was to be expected that some EU countries with high rates of VAT would fear a loss of business to countries like Luxembourg which charge only 15% or Madeira, with 12%, it is more surprising that traders in the EU feel threatened. Taken together with the stiff resistance already expressed by both US companies and the administration, and the need for unanimous approval by EU member states, this proposal looks still-born.
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