For years, in a bid to augment annual tax revenue for European governments, the EU has been wanting to tax its digital economy more severely. Additionally, the existence of low-tax countries in a generally heavily taxed continent has made European lawmakers more adamant in their determination to adjust and/or harmonize tax rates.
Whereas previously VAT, Value Added Tax, a Good and Services Tax, was applied based on the seller’s country, new EU fiscal rules regarding the taxation on digital products will determine VAT rates according to the buyer’s country. So where we live will decide which VAT rate we pay.
The new VAT rules will affect amongst others purchases of e-books and music, internet calling services, smart phone applications, cloud storage and movie streaming. Its implementation so far remains unclear.
Some argue that the new VAT legislation will help level the playing field for national online retailers. Even so, it will make things a lot more complex for small businesses which will need to track and collect a wide range of tax rates depending on where their customers are based.
Traditionally and for practical reasons, people generally buy their goods close to where they live. Online shopping has made it possible to buy even closer to home. From home. Goods and prices can be compared, bought and tried and returned. Still, international online shopping can be a hassle. For reasons unclear and unknown, certain items do not ship internationally. Shipment costs and custom clearance can be off-putting. Return policies often remain an obstacle. Digital purchases however are not subjected to such problems. Immediate, safe, un-physical. The click-buy. Finger fast. And, of course, price driven. So, in come the big boys.
Apple, Amazon, Google, often lodged in low tax zones, accused of brutal working conditions and exploitation, have changed the market place beyond recognition. Change, on a massive scale and as an industrialized process is scary. Being made possible thanks to new technology makes it more than scary. It makes the change elusive. Especially for politicians and bureaucrats who operate with mindsets, stuck in the past, and ambitions limited by the short-term.
Naturally, there is something noble, something Robin Hoodish about taking on the big boys. Only this time, Robin Hood looks dangerously like the tax collector.
Tell me where you live and I tell you what you pay. Tell me where you live and I tell you … something else.
Across the Channel, a shift in Britain’s laws regarding pornography means that all online video on demand pornography will be judged the same as pornography sold legally in stores on DVDs. Hence online porn will become subject to the restrictions of the British Board of Film Censors (BBFC). The new laws will ban various acts being depicted in online pornography produced in the United Kingdom. Acts that could be ‘banned’ under the law include: spanking, caning, aggressive whipping, penetration by any object “associated with violence”, physical or verbal abuse (regardless of if consensual), urolangia (known as “water sports”), female ejaculation, strangulation, facesitting and fisting.
The change in law does not make it illegal for people to watch videos produced outside Britain or to perform the acts themselves. Thus it is not expected to affect consumers. It will however cause problems for British pornography producers and websites.
As with the VAT, nobody really knows how these new pornography laws are going to be enforced.
But neither the tax collector nor the censor can be deterred. He caught on. His teeth solidly in the consumer’s flesh.
Taxation is an obscure field. A mine field. Better left to specialists. For once, one could probably argue the same for pornography.