AppleInsider Staff
Apple may be forced to increase the amount of Value Added Tax that it charges for iTunes music and video sales in the U.K. as Her Majesty's Treasury pushes to end tax loopholes that allow consumers to pay much lower rates on digital purchases.
The new law, backed by Chancellor of the Exchequer and Second Lord of the Treasury of the United Kingdom George Osborne, would end a policy that allows Apple to sell downloads through EU countries like Luxembourg with VAT rates as low as 3 percent. Instead, Apple would have to levy the U.K.'s full 20 percent VAT for purchases in Britain, according to The Guardian.
"As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services," an announcement from the Treasury reads. "From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue."
The change is said to have the potential to raise government income from taxes on digital sales by as much as £300 million ($494 million) each year.
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55 Comments
It's an interesting move. Of course the amount collected will be less as people only have so much money to spend. Will it reserve the legitimate purchase trend? It would of course also be fair when doing this to remove the VAT on eBooks. Currently they have VAT on them whereas printed books don't.
You gotta love British titles. "Chancellor of the Exchequer and Second Lord of the Treasury of the United Kingdom"!
One look at the title and you're compelled to do whatever he says!
Owning a Royal castle is not cheap, gotta find a way to pay for it.
This is a policy that will prove to be totally counterproductive. The english public are already squeezed by years of "austerity" measures (though none sees the politicians taking pay cuts). Adding VAT to downloads of music and apps will simply mean people will buy less which, in turn, will put less money into the chancellors pocket... it will also mean that people will start downloading music illegally again which will, sadly, hurt the artists, authors and developers. Perhaps a pay cut for those at the top of government would have been a better place to start to say nothing of reducing the mindless financial waste that all governments seem to be so good at!
books are sold at reduced rates (0% to 10%) in all union except UK and Denmark, but afaik, it is Amazon who do shells games with VAT not Apple. And music is normal rate everywhere. Now UK will have a big problem to apply this I would think.