EU PROPOSES TAX ON INTERNET SERVICES

The European Union's executive body on Wednesday unveiled a long-awaited proposal to impose value added tax (VAT) on software and other services, such as music, delivered in digital form over the Internet.

The proposal would also cover subscription-based and pay-per-view radio and television broadcasts.

"The proposal would ensure that when these services were supplied for consumption in the EU, they were subject to EU VAT, and that when these services were...for consumption outside the EU, they were exempt from VAT," the European Commission said in a statement.

VAT rates in force in the 15-nation EU vary from country to country but are set within a 15 to 25 percent band. Under the proposal, U.S. and other non-EU software suppliers with more than 100,000 euros of sales to private customers in the EU will have to register for tax purposes in one EU country. The proposal must be adopted unanimously by EU governments to take effect. It is expected to be discussed formally during the second half of this year.