Yet it is fundamentally incorrect. I'm not an EU citizen, so I have zero reason to care about their laws. I will simply ignore them, and the EU has no recourse, other than possibly mandating that their ISPs block me or something. Which I also do not care about.
If you want to do business with EU citizens, you have to follow EU law. Before the internet, you had to open a shop here, or send your goods over the border. The only thing that has changed is the fact that you provide a virtual service over the internet.
No, if I want to have a physical presence in the EU I have to follow EU law. But if I'm residing entirely in another country, and EU citizens want to do business with me over the internet, I could care less what EU law says. And no amount of whining on this thread will change the fact that the EU has no leverage over me.
>I could care less what EU law says
You need a way to sell to EU (if you wish to do business there).
Digital services (say from US) do require EU VAT registration. If you don't have that and your country has tax agreement with the EU (or some countries from EU), there is a risk to be prosecuted. It won't happen if you get like 1000 customers in each country of the EU (as the latter has no global tax organization like IRS).
Keep in mind also that if you have too much unexplained income your own tax authorities can investigate the case, incl. anti money laundering.
Bottomline is: it's rather hard to sell services (lest goods), in cases where you non-compliant with the laws.
Internet is not a magic wand.
If I break US law over the internet against a US company/person, even though I do no business in the US, have never been there, and don't plan to be there, guess how long before I'm dragged making license plates with words like "liberty" or "freedom" on them in an American rape gulag?