Impact Of Eu Proposal Of Vat To E-commerce Goods And Services

The United State Mission to the European Union of Brussels, Belgium report dated February 8, 2002 indicated that the “United States has "serious concerns" about a European Union (EU) proposal to apply value-added taxes (VAT) to imports of certain goods and services delivered electronically (e-commerce).” The report listed three disturbing aspects of such proposal which are: “(1) could require U.S. sellers to charge a higher VAT than a European competitor selling the same product, (2) it could subject U.S. sellers to more onerous administrative and compliance requirements than their EU competitors, and (3) it could result in a higher VAT on digitally delivered products than on physically delivered equivalents.” According to Deputy Treasury Secretary Kenneth W. Dam, the United States has promised that any taxation of e-commerce be "neutral and equitable between conventional and electronic forms of commerce", and that a unilateral action would not be justified while the Organization for Economic Cooperation and Development (OECD) is trying to reach a global consensus on the issue.

The following questions have been addressed in this article:

What is the place of taxation rules for services?
Why is Community legislation necessary in this area and what are its main aims?
What are the VAT’s issues with non-EC business and private customers with E-Commerce?
Should an individual who is receiving the services be held accountable for VAT charges on the supply?


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