PricewaterhouseCoopers (PwC) has set up a new Web site at pwcebiztoolkit.com to help e-tailers comply with new European Union regulations that come into force in July.
In less than four months' time, all e-commerce firms selling products in the European Union will be required to collect VAT, even if the seller is not based in the EU. Companies selling digital goods, such as downloadable music, movies, games and books, will also need to meet the terms of the new regulations.
According to PwC, individual EU member states have, in most cases, not yet provided information about the registration procedures or related guidelines on how they will manage the new system. The company also claims that when guidelines are produced, businesses will have an extremely short timeframe in which to ensure their systems are meeting the new tax regime.
This week, the professional services and accounting firm launched a new on-line tool that can provide at least some of the information e-tailers will need in order to comply with the complex new set of tax codes.
Among other things, the site will help companies understand the new system and calculate the likely impact of EU VAT on their revenues.
PwC says its Web site will help both EU and non-EU businesses in determining if they can save VAT on revenues depending on where they decide to locate their business.
“These new rules will cause major challenges for businesses who have to adapt their systems to meet the requirements,” said John Fay, PwC Ireland VAT Partner. “We hope that the Web site will help in enabling them to understand the issues they need to be addressing now in planning for compliance with the new arrangements.”
The new law, which was agreed upon almost a year ago, was not widely welcomed, especially by US firms, which will be forced effectively to raise prices for European buyers. Critics also complain about the widely varying VAT rates in the European Union, which dip as low as 15 per cent in Luxembourg and go as high as 25 per cent in Denmark and Sweden, an issue that PwC seeks to address with its new website. The directive has also raised concern about the additional administrative burden it places on e-tailers.
Proponents of the new rules, however, say they will make it easier for EU-based Internet retailers, who are already obliged to charge VAT on sales to customers within the European bloc, to compete with their non-EU rivals.
Under the system, an e-tailer will levy VAT on all sales to EU customers at the rate applied by the country it is registered with. That country will in turn divide the revenues between the other EU nations according to where the sales are made.