From July 2003, the introduction of new VAT legislation across the European Union could have serious implications for the future of online shopping and for the ways in which Irish companies develop their e-commerce strategies. This new legislation stipulates that from July 1st, suppliers outside the EU will have to charge the VAT rate that applies in the EU country in which the customer resides. Consumers will no longer be able to order services from non-EU countries, for example, the US, to avoid paying VAT.
Business consultant PricewaterhouseCoopers believes that this in turn will affect the manner in which digitally downloaded services and online transaction services will be provided to private individuals living within the European Union. Consumers that download electronic books, music, film, games and distance teaching, for example, may see an increase in charges as companies strive to collect the additional tax required by law to meet the new EU demands. Currently only EU businesses in the 15 member countries (with a further ten to join the EU by May 1st, 2004) have to charge VAT.
In order to help Irish businesses to more clearly understand the implications of the new legislation, a new tax-specific Website, Pwcebiztoolkit.com has been launched. The site is also designed to assist both EU and non-EU businesses to determine whether they can save VAT on revenues depending on where they decide to locate their businesses. Individual member states of the EU have, in most cases, not yet provided information about the registration procedures or related guidelines on how they will manage the new system, which gives businesses an extremely short timescale to put their systems in place before the deadline of July 1st, 2003.
22/05/2003
Ltd
