US e-tailers hit by European ecommerce tax

NEWS European web users will soon have to pay tax on goods bought online from non-EU member states, including America, following a landmark legislative ruling being made today. But the move is good news for Europe's e-tailers, who are now operating under the same tax regime as their global competitors. Currently, suppliers outside the EU are not required to add VAT to purchases made by EU consumers over the internet, and so have been able to offer lower prices than their competitors operating within the EU. But European Union ministers are expected to give the go-ahead for a law that will force all non-EU online suppliers to add VAT on sales to EU consumers at a meeting taking place this afternoon. A spokeswoman from the European Commission told silicon.com: "It's going to be adopted without discussion in today's meeting." The proposal has annoyed the Bush administration which has concerns about future trade between the EU and the US. US deputy treasury secretary Kenneth Dam said that the Bush administration has serious concerns about the move to force US suppliers to charge taxes according to the country of each consumer's origin. Non-EU online suppliers will have to register with a VAT organisation in the EU country of their choice and charge each consumer a tax rate specific to the consumer's own country. VAT will then be distributed from the registration country to each consumers country. The new legislation will come into practice by July 2003.