The European Commission intends extending the timeline
for existing value-added tax (VAT) rules covering electronic
services.
The extension is proposed to make sure electronic services
exported outside of the EU are still exempt from the tax.
The planned extension would operate until 31 December 2008.
Rules applied from 2003 made sure electronic services bought for
consumption outside the EU were exempt, but these rules are now due
to expire.
The rules include TV and radio services, for instance.
Without an extension, the Commission warned previous rules before
2003 would apply, meaning such services would not be exempt.
This would mean that EU providers of such services would have to
charge VAT and be at a disadvantage to other providers located
outside the EU.
"I urge the EU Council of Ministers to rapidly reach an
agreement on this extension. I cannot imagine we would revert to
the rules prevailing before the e-commerce directive was
introduced," said taxation commissioner Laszlo Kovacs.
Kovacs also wants the electronic services exemption to be made
permanent.