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BRUSSELS--EU finance ministers will on Tuesday rubber stamp new rules for taxing products bought on the Internet such as games and software, EU officials said on Monday, a move likely to earn the ire of the United States.
Under the EU bill, the United States and other non-EU firms will be asked for the first time to levy value-added tax (VAT) on e-commerce with private customers in the 15-nation bloc.
At the same time, EU companies will be exempted from VAT for services they provide to non-EU residents.
Both moves are designed to remove what the EU sees as a competitive disadvantage against the United States.
"These new rules are particularly welcome for community suppliers of digital products, like games and software," European Commission Jonathan Todd told a press briefing.
"They would remove the current obligation of applying VAT to sales on countries outside the union," he said.
The United States in February accused the EU of taking unilateral action over the new rules and warned that it might complain to the World Trade Organization (WTO).
News source: ZDNet News - EU to tax e-commerce with the U.S.
BRUSSELS--EU finance ministers will on Tuesday rubber stamp new rules for taxing products bought on the Internet such as games and software, EU officials said on Monday, a move likely to earn the ire of the United States.
Under the EU bill, the United States and other non-EU firms will be asked for the first time to levy value-added tax (VAT) on e-commerce with private customers in the 15-nation bloc.
At the same time, EU companies will be exempted from VAT for services they provide to non-EU residents.
Both moves are designed to remove what the EU sees as a competitive disadvantage against the United States.
"These new rules are particularly welcome for community suppliers of digital products, like games and software," European Commission Jonathan Todd told a press briefing.
"They would remove the current obligation of applying VAT to sales on countries outside the union," he said.
The United States in February accused the EU of taking unilateral action over the new rules and warned that it might complain to the World Trade Organization (WTO).
News source: ZDNet News - EU to tax e-commerce with the U.S.
"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," said Tara Bradshaw, a spokeswoman for the U.S. Treasury, told Reuters from Washington.
The disagreement is likely to add to a series of arguments the United States and European Union are having over trade, including a row over new U.S. steel import duties.
The EU bill will cover electronic services that are downloaded or consumed online, as well as subscription-based and pay-per-view radio and TV broadcasting.
Non-EU providers in a business-to-consumer market will have to register with a VAT authority in one of the 15 member states.
That country will then distribute the taxes collected to other countries, based on where the actual sales are made. Member states will start applying the new rules in July 2003.
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