2015-01-12 11:34 GMT+00:00 JLMS <jjllm...@googlemail.com>: > But people want Amazon to pay taxes locally here in the UK, don't they? > (and elsewhere of course) > > Well there, that is the logical conclusion of legislating with the gut. >
I'm not sure "with the gut" is fair *or* for that matter the suggestion that legislation has been made behind closed doors. VAT has formed an important part of the EU/EC/EEC economic system for a long time. The principle has always been that, in general, VAT is paid at point of supply. The logic of VAT would have meant that electronically supplied services were taxed where the customer belongs. The rules prior to 1 January 2015 were an exception to make life easier for electronically supplied services and intended to be temporary. At least that is always what I anticipated. The basic VAT rule change that came into force on 1 Jan was very widely debated and consulted and the decision was made years (literally years) ago. I remember at an early stage of my Masters course we discussed the VAT reforms as part of a general e-commerce course. Now I teach e-commerce, I don't cover tax (alas) but I have the materials. Anyway, I think "gut" is wrong. There are good policy reasons for making sure that services supplied in the UK are taxed at UK rates etc. > > I don't know which principle can be invoked here, there is a reason why > VAT has never been charged in the location of the buyer, let me quote the > Economist on this regard (referring to US inter state sales taxes, but it > is pretty much the same situation): > It has been charged at the location of the buyer in most other situations, including where the buyer is VAT registered. The current change aligns consumer and business systems. > > "That is because the Supreme Court ruled in 1992 that states cannot force > retailers without an in-state presence, or "nexus", to collect sales tax; *it > would lead to chaos in interstate commerce*, since America has some 8,000 > different sales-tax jurisdictions that are constantly changing their rules > and are not even aligned with zip codes. But there was ambiguity in that > awkward word, nexus." > > Let me emphasize "*it would lead to chaos in interstate commerce".* > > In the US, maybe. We do not have 8000 different sales-tax jurisdictions. We have one VAT system, with some aspects of the system, including rates and administrative procedures decided at the level of 28 member states (two orders of magnitude less). Not doing it this way has caused distortions (such as the Luxembourg VAT scandals we know about) and they should go. The situation before the reform allowed very big companies that could easily choose their seat of operations to undercut smaller companies and businesses that could not do so easily. Amazon was just one example culprit. The problem is not the underlying idea, but the administrative implementation. There are numerous, and relatively easy, ways that the administrative burden for small businesses could be made to vanish and for larger organisations made so that it was fairly minimal. It would require a reasonable amount of effort on behalf of national governments and the commission, but that is what they are there for. For example: there is no official API that allows me reliably to retrieve the VAT rate of supply applicable to a member state. Easy enough to insist that member states must publish their rates in a machine-readable fashion, only change those rates at certain times and with certain amounts of advance notice and so on. Technically solvable. Or (another example) an EU standard for what must be included in a VAT invoice. Some rules on de minimis (low threshold) supplies and so on. All this was not done, instead VATMOSS was created as a solution for smaller traders and, as is quite clear, it is hopelessly inadequate. > How people, even Amazon, are supposed to follow VAT regulations and rates > in the 20 something member states is an exercise left to the reader. Of > course many people will argue that big companies like Amazon can deal with > this extra burden, which they may, in order to swiftly pass the extra cost > back to us, the costumers. > > This legislation should be repelled in the sole basis that it is almost > impossible to comply with in an economically viable manner, as well as the > very well argued reasons related to data retention (which would make the > whole of the EU less competitive). > The data retention requirement is surprisingly onerous and is a possible point of attack on fundamental rights grounds. -- Francis Davey
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