UK based computer game and DVD retailer Gameplay.com says its business is being threatened by a tax loophole that allows offshore companies to undercut European competitors by escaping liability for VAT (Value Added Tax).
As the law stands, offshore retailers can sell products within the EU VAT free provided the goods cost less than £18 and this therefore allows these companies to undercut UK firms such as Gameplay.com by 17.5% on certain products.
Gameplay.com has raised the issue with MEP (Member of the European Parliament) David Bowe who has in turn sought a response from the commissioner responsible for the internal market and taxation, Fritz Bolkestein. Consequently, the Commissioner has promised to undertake a study on the matter and has suggested the current situation is probably damaging the European market in such diverse products as books, CDs, contact lenses and even flowers, according to legal news service OutLaw.com.
"I will certainly be keeping up the pressure for action - and I also intend to raise the issue with our own Government since I understand that in some EU countries, for example Belgium, VAT has to be applied on imported goods whatever their value," Bowe told Outlaw.
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