Recorded music, retail
Having closed the loophole physical product, George Osborne’s latest budget has closed a quirky UK tax loophole that meant consumers were paying VAT at very low foreign rates on online purchases of books, music and apps. The UK’s Chancellor will bring in new laws in 2015 making sure that internet downloads are taxed in the country where they are purchased, meaning web firms such as Amazon and Apple will have to charge the UK’s 20% rate of VAT. At the moment they are allowed to sell digital downloads through countries such as Luxembourg, where the tax rate is as low as 3%. The budget document said: “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. 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” .