2003 issues

- Around may/july online tax will begin to take some profits (EU´s digital VAT will be first - US is probably going start 2004 or mid 2004)

- VISA US & MC US will make new rules... Verfied by VISA will be sweet and sour... no more chargebacks on some tracsactions - less recurrings.

- VISA & MC EU will get more adult business - they will be happy at first :rolleyes:

- More payment options at paysites to avoid the "all egs in VISA´s basket" situation from ever happening again. ACH, SMS, local debit/credit cards, 900#, ecash, all to spread the risk. Some of the big processors will take these on making it available for most paysite owners with just a few clicks.

- Paysites will find even more ways to earn money from their members - FTC will start to take notice.

- Paysites will do their own chargeback scrubbing on top of what the processors are doing. Will hurt profits, but save merchant accounts.

- Hosted galleries will kill most tgp submiters business. TGP owners will accepted more ads on galleries, since they also get paid for those ads.

- Number of free movies posted on TGPs will skyrocket

- It will be possible to fight most of the hitbots, and proxybots, and they will start to loose ground at adult sites.

and alot of other issues...

Oh btw. Hi to everyone (this is my first post on Oprano) and Happy New Year :okthumb:

Hey Rollo - for you first post on Oprano you have set a pretty high standard for yourself!! :okthumb: :okthumb:

The tax issues is going to be a big one in the future. When I was in Cali that was the talk in every newspaper - talking about how Cali is losing millions in tax money from the net.

Will be interesting to see how it goes - gov;t loves to get their greedy hands on every part of the economy - Internet will not be any different. The longer we can hold out the better....

Awesome rookie post, Rollo :)

I agree.

If you don´t like taxes and think its a boring subject then skip this post :zzz:

Mike AI - yes, in time the internet will be taxed... I hope it will sometime in 2020s :D

I remember this quote from somewhere:

"The best things in life are free, but sooner or later the government will find a way to tax them"

EU have been talking about this for last 2 years, and the solution they have found is not going to work unless they get the banks, credit card unions (visa & mc), and none EU countries (like the US) to inform about their clients/custormers/citizens. EU are having their member states/countries put into law that every none EU company will have to register in a EU country, and from that country pay VAT to each EU country based on each EU country´s own national rates. Ex. - if you sell to Europeans with credit cards thru a processor like Epoch, then you or Epoch should register in a EU country and pay VAT to each EU country:

Sales made to German surfers = 16% VAT of total subscription price
Sales made to Swedish surfers = 25% VAT of total subscription price
etc.

And with soon to be 25 different countries in the EU, which each have their own VAT rates, then get ready for a accouting mess.

Now there are loop holes. Instead of registering a US company in the EU, then buy a company in some low VAT rate EU country like Luxembourg. Because of "free trade" laws within the EU you can sell products to all EU countries, with Luxembourg 15% VAT rate, and if you sell to surfers from none EU countries like the US, then you will not pay VAT to any EU country (tax free sales from EU to the US).

Now like I mention earlier, then this will not work, because how will the EU get US companies to register and pay tax in the EU, unless the US goverment accepts it (not going to happen with the current Bush goverment)... but then again, politicians from both the US and EU want to tax the Internet, so maybe they will do some tax deal, and "we" will be left holding the bill... :zoinks:



Last edited by Rolo at Jan 1 2003, 07:52 PM

with geanie being out of the bottle,
I just don't see how governments can tax it directly and tie it to sales.

governments are inventive, I have my faith in them and they'll find the way to fuck a wet dream, but still...

Serge, I agree... the sales tax system in the US is different from VAT in the EU, so the US solution to net tax will be very interesting. I belive that only a nationwide net sale tax can keep US net companies from looking for the same loopholes as European companies are...

There is VAT on almost everything in the EU - beside from making a huge % of all tax income, then the goverments also use VAT to keep tracks of who buys and sells goods/services (Big Brother IS watching). The VAT is huge income of the EU, and they want to keep it that way. So no EU politician want to have a internet tax free heaven (it has never been tax free to sell on the internet in the EU - EU adult net companies have always had to pay their country VAT for sales made to surfers - no matter where the surfer is from). However this all about to change with the new VAT laws.

Ex. One of the first tax cases using the EU VAT system loophole is underway... a portuguese phone company is licensing phonelines in other EU countries like Denmark (who have 25% VAT), and then reselling them to citizens in those countries... now the trick is that the portuguese phone company are sending the bills to their European custormers from Portugal, and in Portugal the VAT is only 13%.... Local politicians in Denmark are mad about this, but there is nothing they can do because of the EU free trade laws, so Denmark is about to loose billions in tax revenue from phone companies located outside their own country. This loophole can be used by many other industries working with digital products - like the adult net :)

But this still only apply to European companies selling direct to surfers from within the EU. US companies are first to start their EU registering in July 2003 - however lets see how many will do that voluntary :moon:

Hmmm, interesting Rolo, one of the biggest problems I see is one you touched on -- how in the world would the EU enforce collection on VAT? Let's say you've got an Aussie company using IBill to process for a sale in Germany. The collection point is IBill? the Aussie company will get a bill for what they need to send in?

Very much a giant tangle like the current state sales tax system here with interstate commerce.

So far I have heard of 4 models:

1. None EU companies would be required to appoint a local fiscal representative who would be responsible for the company´s compliance with VAT rules. But again - who says ANY none EU would do that voluntary.

2. The standards for secure Internet payments (e.g. SSL/SET) should be required to include a field which would disclose the identity and location of each customer so that the various tax authorities could audit tax compliance. Again this would be a voluntary solution, and no one have said what would happen if you do not make these changes (one hardcore rightwing EU politician have said to ban urls/companies at the European ISPs so "normal" surfers can not access them - however this will NEVER happen too many "good forces" will fight this).

3. Banks that process payment data from credit cards, debit cards, wire transfer etc. would retain VAT from the transactions they handle. This could be done with VISA and MC, since they already have marked which merchant accounts do online trade and where the companies operating the merchant account are located. ECash companies like PayPal could also get forced to supply the same information to the EU. Wires would probably fail on the grounds that it is not possible to determine from the payment data the nature of the goods and services purchased (and therefore whether they are subject to VAT), however there is voluntary system inplace today, where the sender informs what kind of product/service he is paying for.

4. Last there is the "old logic of the tax man", where the tax authorities try to determine how much companies have made on online sales to European surfers. Once they have set the ammount they think the companies should pay, then the companies either pay them or try to prove that the companies are innocent (guilty until proven innocent).

If companies do not pay the EU after they have been told to pay VAT, then the EU could do a asset search inside the EU member countries for any assets belonging to the companies - in some cases that could also be privat asset belonging to mangement or others with key postions in the companies... if they do not find any assets, then they have in past send collection agencies to try and collect the money in the home countries of the companies (don´t think they will try that, unless the mangement of the company are EU citizens).

I wouldn´t fear anything from the EU at first, because this will be new law mid 2003, and alot of countries (including the US) have not said positiv things about it, however with politicians worldwide starting to look for ways to tax the internet, then sure something will be worked out eventually.