Many Businesses Unprepared For New EU VAT Laws

by Robin Pilgrim, LawAndTax-News.com, London

17 April 2003

International accounting firm, PricewaterhouseCoopers warned this week that many businesses are unlikely to be ready for the EU's new VAT rules when they become law on July 1 2003.

The changes to the European VAT legislation stipulate that all businesses providing digitally downloadable services such as electronic books, games, music, films, and online courses, to EU residents must now charge VAT. This development has caused grave concern amongst e-tailers from the United States, who have not previously been obliged to levy the charge.

Complicating the situation still further, according to PwC, is the fact that many EU member states have not yet released guidelines or information on the proposed registration procedures for non-EU online vendors, meaning that affected businesses will have an extremely short period of time in which to implement the necessary changes.

'This new ruling will cause major challenges for businesses who have to adapt their systems to meet the requirements,' Christine Sanderson, UK Indirect Taxes partner at PricewaterhouseCoopers observed.

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