Starting next year, online purchases of foreign media — including books and apps — will be taxed at the UK’s 20% rate of VAT.
Say goodbye to 99p song downloads: the finance bill that will come into effect January 1, 2015 will tax internet downloads in the country where they are purchased, preventing web companies from passing sales through intermediate countries with lower tax rates.
The Treasury estimates that the new rule could raise an extra £300m, but online retailers like Amazon and Apple could pass on those costs to consumers. Firms that sell physical goods in the UK have criticized existing laws, saying they give online retailers an unfair price advantage.
The UK is not the only country working to modernize tax laws for the age of online commerce. Earlier this year, Japan revealed plans to levy taxes on any downloaded content from outside the country. [via The Guardian]
