24 March 2014 - 10:44am | posted by

Apple and Amazon hit with VAT ruling on UK downloads

Apple and Amazon hit with VAT ruling on UK downloadsApple and Amazon hit with VAT ruling on UK downloads

Apple and Amazon will no longer be able to dodge charging VAT on UK downloads after chancellor George Osborne moved to close a loophole which allowed the international giants to skip the 20 per cent tax.

Previous regulations allowed firms to charge very low foreign rates of VAT on UK purchases of music and book downloads, by routing purchases through subsidiaries in the likes of Luxembourg where taxes are as low as 3 per cent - much to the chagrin of their UK competitors.

Buried in the detail of the budget the Treasury 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."

It is estimated that the move could rake in £300m in additional revenues for the Treasury, but also spell the end of the 99p download.

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