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18 Apr 2001, USA

Dear Dr Ecommerce

I just read an interesting article on http://www.ecommercetax.com/doc/020401.htm that says the EU proposal to tax eCommerce emanating from outside the EU have been "withdrawn". These are the proposals mentioned in the "Don't panic" guide (pages 62 to 63) on your website.

Is it true that these proposals have been withdrawn? what is the
current state of play?

With best regards

John

Dear John:

Firstly, read carefully: THE EU HAS NO INTENTION OF TAXING E-COMMERCE! The only intention is to apply VAT to products and services purchased within the EU - regardless of the means of purchase. However, the sensitive issue is products which are delivered electronically (such as software, reports, music, etc.) from outside the EU.

That said, I asked EU policy expert (and E-policy News editor ) Elina Kaartinen what she knows about withdrawn tax proposals. Elina replies:

"The proposal has not been withdrawn. Parliament gave its report on 14 December 2000 and now the proposal is in the hands of the ECOFIN Council and waiting for common position from the Council. However, the Council has asked a Working group on fiscal questions to look into problem related to third country VAT questions (registration, tax revenues etc.) and this working group should submit their work at the latest on 30 June 2001. Thus no common position is expected before the working group report has been discussed. For time being the proposed directive is thus still pending and alive."

In addition, it is important to bear in mind that VAT is a tremendously sensitive issue and finding an agreement that suits everybody is about as easy as juggling 15 glasses of red wine.

Good luck,

Dr. Ecommerce