WASHINGTON, Feb 9: The Bush administration on Friday said it had serious concerns about a European Union proposal to apply valued-added taxes to imports of certain goods and services traded over the Internet.
In a statement, Deputy Treasury Secretary Kenneth Dam said the proposal could be at odds with international commitments the EU has made, including those under the World Trade Organization which require imported goods and services to receive the same treatment as domestic ones.
He also criticized Brussels for making the proposal while work on ecommerce tax issues was still under way in the Organization for Economic Cooperation and Development.
Unilateral proposals such as the EU’s may encourage others to take unilateral measures, rather than waiting for the global consensus that can be developed through a more deliberative and inclusive process, such as the OECD’s, Dam said.
The charge of EU unilateralism was sort of a reverse echo from last year, when Brussels routinely accused the Bush administration of ignoring the international consensus on a number of issues, such as global warming.
Under the EU proposal, US sellers of digitally delivered goods and services such as books, newspapers and magazines could be required to charge higher value-added taxes on sales in the EU than their EU competitors, Dam said.
That is because US companies would be required to charge the value-added tax rate that applies in the country where the product is consumed, he said.
In contrast, EU companies would be allowed to charge the value-added tax rate in the country where they are based, regardless of where product is consumed, he said.
Digitally delivered products also could face higher valued-added taxes than physically delivered products, he said.—Reuters
