The news that the European Union has endorsed proposals which will oblige non-EU firms to charge VAT on downloaded and online services and products is unlikely to improve the already fraught atmosphere between the United States and the 15 nation bloc.
Speaking to the Reuters news service, unnamed EU officials announced that, running parallel to this, companies from European Union member states will be exempted from VAT on certain services provided to EU residents, in order to remove what is seen as a 'competitive advantage' for firms based in the United States.
The move has been welcomed by European suppliers of digital products and services. However, the US Treasury has renewed threats to take the EU to the World Trade Organisation over the issue, arguing that the new rules represent unilateral action.
'We continue to be concerned about the potential for discrimination against non-EU companies in terms of the tax rates required to be charged and the administrative and compliance burden,' Treasury spokeswoman, Tara Bradshaw told Reuters earlier this week.
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