THE average cost of an Internet connection in Europe will rise next month
as the European Union rushes through legislation to close a tax
loophole.
Currently, Internet providers that have their head office outside the EU pay
no sales tax on the services they provide to customers in Europe. However,
European firms have to add the tax to customers鈥� bills, giving their
non-European competitors a substantial price advantage. In Britain, for example,
the rate of value-added tax is 17.5 per cent.
The new law changes the point of taxation for online services from the
provider鈥檚 head office to the customer. 鈥淲e abide by the law as it stands at the
moment,鈥� says a spokesman for CompuServe, one of the largest US-based Internet
providers. 鈥淚f the law changes then we will take the appropriate action.鈥�
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