EU heading towards new E-commerce VAT regime

The European Union could soon reform the VAT tax system for e-commerce, according to internal market commissioner Frits...

The European Union could soon reform the VAT tax system for e-commerce, according to internal market commissioner Frits Bolkestein.

Long standing opposition to harmonisation moves among the majority of EU states is fading and the idea could soon receive approval at the Council of Ministers, claimed Bolkestein.

National governments had traditionally objected to proposals, fearing they would forfeit VAT revenues in the short term.

Under the proposal, electronically delivered services for consumption within the EU would be subject to VAT, while those for consumption outside the EU would not attract the tax.

Speaking to the European American Business Council, in Washington DC, the commissioner claimed that criticism of the plan "was based on misconceived interpretations of what the measure was about".

Bolkestein told the audience, "I can fairly state that even the most vociferous of our critics now understand the reasons for the proposal and the validity of our approach."

Bolkestein added, "Considerable progress has been made in the negotiations on this proposal in the Council in recent months. I am convinced that we are now nearing a solution, which delivers the objectives of simplification and facilitation, yet respects the valid concerns of EU member states in respect of the flow of tax revenue."

Keith Nuthall

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