Tax likely on sales over internet

By RICHARD BRADDELL

Taxation of internet transactions is a prospect if the European Union goes ahead with expected moves to protect its tax base.

In New Zealand, little attempt is made to collect GST on goods and services bought over the internet from other countries.

But the 15 European Union member states are expected to vote in favour of rules that would force non-EU vendors to collect value-added tax on sales of goods and services sold over the internet into the EU.

A tax partner with accounting firm KPMG, Craig Elliffe, said that if the proposed law was approved, "it will probably force most developed countries such as New Zealand to actively consider following suit."

Mr Elliffe said that suppliers of more than €100,000 ($208,530) of goods a year would be expected to register in a European jurisdiction and pay tax to that country.

While the United States has strongly resisted the EU proposal, Washington is considering a similar solution internally to redress sales tax losses in states that have imbalances in internet transactions.

Mr Elliffe said the US was arguably the world's leading provider of digital goods and services.

Until recently, internet transactions had fallen into the too-hard basket. But the issue had been considered by the OECD out of concern over potential erosion of the consumption tax base.

Amazon.com, the world's largest bookstore, was an obvious candidate for registration under any new rules.

But, Mr Elliffe said, the main sanction against suppliers who failed to comply would be their reduced ability to avail themselves of legal protections in the importing jurisdiction if they did not do so.

He warned exporters to the EU to be prepared for e-tax developments very soon.

Links


Amazon