EC proposes to improve value added tax environment for e-commerce businesses
The European Commission (EC) has proposed new tax rules to support e-commerce and online businesses.
The proposals intend to enhance the value added tax (VAT) environment for e-commerce businesses in the European Union (EU).
Both companies and consumers could find it much easier to sell and buy goods and services online if the proposals are implemented, said the European Commission.
The proposals would go to the European Parliament for consultation and to the Council for implementation before they are put into effect.
The Juncker-Commission revealed that unlocking e-commerce in Europe and the establishment of a digital single market are among its top priorities.
It said that by launching a common portal for online VAT payments, dubbed One Stop Shop, throughout the EU, VAT compliance expenses could be brought down drastically. This, it says could save e-commerce businesses €2.3bn a year.
Once implemented, the updated rules will make sure that VAT is paid in the member state of the final consumer. This, the commission says will result in fairer tax revenue distribution among the other member states in the EU.
It proposes to introduce new rules that would have e-commerce companies fulfill their EU VAT obligations conveniently in one single place.
VAT rules need to be simplified for startups and small online businesses while VAT on cross-border sales below €10,000 have to handled locally, proposed the Commission.
It also said that VAT fraud from outside the EU has to be punished to avoid market distortion and unfair competition.
The new tax rules would also help member states to recover the VAT losses on online sales each year by an estimated €5bn, said the Commission.
Image: The European Commission has proposed new tax rules to benefit e-commerce and online firms. Photo: courtesy of The European Commission.