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FC: EU to impose VAT on digital goods and software, from

------- Forwarded message follows ------- Date sent: Wed, 01 Mar 2000 16:11:22 -0500 To: politech@vorlon.mit.edu From: Declan McCullagh <declan@well.com> Subject: FC: EU to impose VAT on digital goods and software, from WSJ Send reply to: declan@well.com

[I'd be happy to forward other views. Anyone wanna defend this? --Declan]

>From: "Ronald Nehring" <rnehring@atr-dc.org>
>To: "Declean" <declan@well.com>
>Subject: e-Freedom: EU to impose VAT on digital goods
>Date: Wed, 1 Mar 2000 09:29:21 -0800
>X-Mailer: Microsoft Outlook IMO, Build 9.0.2416 (9.0.2910.0)
>Importance: Normal
>
>The dumb idea of the day award goes to the European Union, which is
>drafting a plan to require all US and other non-EU countries selling
>digitized goods to Europeans to register with the EU and
>calculate/collect/remit the VAT.
>
>Anyone want to take a stab at just how the EU would enforce a tax
>collection obligation on companies without a "nexus" in the EU? 
>Maybe they can take the Chinese route of blocking access to any .COM
>site that isn't registered. Yeah, right.  The hackers would have a
>field day with that one. Alternatively, maybe the EU has found a new
>role for the British SAS. Perhaps the next James Bond film could be
>called, "The World (of Taxes) is Not Enough."
>
>-- Ron Nehring, Americans for Tax Reform
>
>
>Wall Street Journal
>3/1/00
>
>EU Proposes VAT For Digital Goods;
>Plan Would End Tax-Free Bargains From U.S.
>
>By Handelsblatt correspondent Joachim Hoenig and Wall Street Journal
>Europe staff reporter Brandon Mitchener
>
>BRUSSELS -- The European Commission is drafting plans for a
>value-added tax on digital products that would end the days of
>tax-free U.S. software delivered over the Internet, according to
>people familiar with the situation.
>
>A draft directive scheduled to be presented to European Union member
>states in late March foresees a range of VAT rates on so-called
>"virtual goods," including software, music, videos, photos and
>educational products. Under the plan, VAT rates would depend on
>whether a buyer is a company or an individual and in which of the
>EU's 15 member states a seller is located, or in the case of non-EU
>vendors, where it is registered. The proposal would also introduce a
>change in EU tax policy by treating some products as goods when
>delivered by post but as services when they are delivered online.
>While the change would help to level the playing field between
>European software makers and their U.S. rivals, the proposal faces
>resistance from parts of Europe's nascent e-commerce industry, which
>already wrestles with VAT rates that ranging from 0% to 25% --
>depending on the country and the product -- as well as from non-EU
>companies worried about its potential impact on trade.
>
>"We're worried that any rules relating to e-commerce will be too
>complex and companies will have to deal with too many jurisdictions,"
>says Douglas Gregory, International Business Machines Corp.'s chief
>lobbyist in Brussels.
>

>The commission sees the rapid spread of virtual goods -- some of
>which currently go untaxed -- as a potential threat to its tax base.
>VAT, levied on the final consumption of all goods and services within
>the EU, accounts for nearly one-fifth of the tax revenue among EU
>member states and 44% of the EU's own &100 billion budget.

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