MPs warned in a report on the e-envoy and e-minister’s first year: ‘E-commerce poses some risk to tax revenues, for example as a result of the difficulties over collecting VAT on cross-border transactions, but also through avoidance.’
And they claimed: ‘We regard the abolition of betting duty as one of the first fiscal casualties.’
The report said the UK Government has ‘some anxieties over the arrangements for collecting tax from non-EU companies on sales to EU customers’.
And it warned that ‘much needs to be done, in particular to establish how VAT is to be collected from consumers in the EU who purchase goods from outside the EU’.
The MPs said this followed international agreement that these should be levied at the consumer’s place of residence, that digital products are not goods but services for taxation purposes and that payments for downloading are not royalties.
It also claimed that there is now apparent consensus around the UK’s position that web sites are not permanent establishments.
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