US companies and industry insiders already have raised numerous objections to the proposal, noting that the definition of "digital goods" is fairly vague in the proposal and warning that small businesses may have a tough time complying with it. Dam raised further objections to the proposal, warning that it could create an un-level playing field for US businesses. Dam noted that unlike US businesses that sell into the union, EU businesses will still be able to tax digital downloads sold within the European Union at the place of supply. Thus, while a European company will be able to charge the same tax rate to every European customer, US businesses will have to calculate the tax rate for each European customer who buys a download, based on the country they live in. "US sellers may be subject to more onerous administrative and compliance requirements than are placed on their EU competitors," Dam warned. In addition, Dam noted that while some EU countries charge a lower VAT for books and newspapers, that same tax break wouldn't be available for digital versions of those products. ECOFIN is expected to reach a political agreement on the tax proposal on Tuesday. But the proposal will still need to be approved by the European Parliament and by the parliaments of individual EU members before it will be formally implemented. That process could take up to 18 months.
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