Some U.S. online companies could soon be required to take on a new role: tax collectors for the European Union.

The EU's Council of Economic and Finance Ministers agreed earlier this month to require companies outside the EU to collect taxes on the goods and services they deliver digitally to European consumers, such as music, videos and e-books. The agreement, expected to be approved in February and take effect in 2003, is another step toward ending the Internet's status as a largely duty-free zone, and it complicates the already controversial debate in America about whether to tax the Internet. Just last month, President Bush signed a bill to extend a ban on Internet taxes in the United States, relieving anti-tax advocates who had to fight off attempts to include a provision that would eventually allow states to tax Net sales. But the bill's supporters were only able to have the ban extended two years--far shorter than they originally hoped. The concessions illustrate the increasing pressure to tax online goods both in the United States and elsewhere. The EU proposal, which was originally put forward last year, has already drawn questions and objections from businesses and trade organizations in the United States. The biggest question revolves around how the new rule would be enforced. In the United States, an individual state can't force a company based outside its borders to collect sales taxes if that company has no physical presence within the state. Likewise, the EU may have trouble forcing foreign companies to collect the value-added tax (VAT) if they have no physical presence in the EU.