Proposed EU download tax irks US government

The European Union plans to introduce a tax on downloads sparking a storm of protest from the US according to reports Friday.

The tax -- on software and other downloadable information -- will apply to companies supplying this type of commodity outside of the EU and will affect both the Internet and pay-per-view television channels.

According to CNN the US Treasury Department's deputy secretary Stuart Eizenstat says the US has serious concerns about the tax, claiming it is higher than the tax paid on offline goods.

A representative from the European Internet Service Providers Association (EuroISPA) says that this will result in a fairer environment for Europe's Internet companies. "The idea is to create a level playing field," she says. "It should make a difference and e-commerce companies in Europe should be pretty pleased."

The legislative wing of the Union, the European Commission, approved Wednesday a proposal for the directive that would make this law. Before becoming a directive the proposal must now pass through the Union's parliament and Council.

The tax will only apply to those companies that deliver to consumers and have an annual turnover exceeding 100,000 Euros. Companies would also only have to register to pay VAT in one European country.

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