EC proposes VAT on all electronic goods bought online

The European Commission (EC) could accept proposals this week to charge Value Added Tax (VAT) on electronic goods bought over the Internet, even if the vendor is based outside the EU.

According to a report in the Financial Times, European ministers will vote on Wednesday to close the tax loophole, although the act must be passed unanimously.

If the ruling is accepted, many US companies selling music, games and software for online download will have to register for VAT for the first time. The US had been pushing for relief for American firms.