VAT man caught in Web of e-commerce tax dodges

Industry leaders warn government is missing out on millions

The Institute of Directors (IoD) has warned that the government could lose up to £10 billion per year in VAT revenues, thanks to the Internet. It says that the scale of online shopping will make it impossible for authorities to track all transactions. The biggest threat comes from products such as software or music, that can be bought electronically from abroad. Meanwhile, spending on e-commerce looks set to increase. Research group NOP says that most people expect to be spending at least twice as much online in the next year. The IoD is calling for government action, but even it will admit there is no easy solution. Taxing goods in the country of origin would be fine within the EU, but more complex outside it, and may even create VAT havens if only one country did not support the scheme. ®

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