TaxCorporate TaxVAT threat to dotcoms

VAT threat to dotcoms

An antiquated VAT rule that was installed before the internet was invented could drive UK-based e-businesses abroad and result in millions of pounds in lost revenue for the Treasury.

Link: AOL choses Luxembourg for VAT base

The rule, which allows non-EU based companies to sell products for £18 or less to member states free of VAT, has enraged small-business owners based on these shores. Andy Mee, joint managing director of online software and music site, Gameplay.com, said he had considered relocating to an offshore jurisdiction because of the rule, but that his first thoughts were with his 32 staff.

‘Yes I’ve considered it,’ he told Accountancy Age. ‘I want a level playing field. Why is it that within the UK, we continue to look after offshore havens?’

A spokeswoman for Customs & Excise said it is aware a ‘situation exists’ and that the European Commission is looking into it. ‘When these rules were brought in, the internet didn’t exist,’ she said. ‘We recognise there are a lot more low value consignments coming into the UK.’

But any changes to the existing status quo could take a long time. The UK won’t do anything until the EC has completed ongoing studies and analysis.

Belgium, on the other hand, has already opted out of the rules and charges VAT on all imported goods.

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