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Apple, amazon, and other digital item retailers will have to charge 20% VAT starting in 2015

A long-standing tax loophole has been available in the UK that allowed buyers of digital download products to pay fewer taxes on their purchases of digital books, music, and apps.
 
That loophole has now been closed and it will mean that Apple and Google now have to charge the standard 20% VAT. This likely means an end to music being offered at 99p.
 
Apple and other digital good sellers were allowed to funnel digital purchases though countries like Luxembourg where the tax rate was as low as 3%.
 

20% VAT on digital downloads could add £300 million in tax revenue

The new law will go into effect on January 1 2015, so fans of digital products in the UK have a bit less than a year before rates go up significantly. The new taxes are expected to raise an additional £300 million in tax revenue.
 
Both Apple and Google have come under fire in recent years for their tax avoidance practices in the UK. Google executive chairman Eric Schmidt defended his company in April 2013, stating, “I think the most important thing to say about our taxes is that we fully comply with the law and we'll obviously, should the law change, we'll comply with that as well." 

Source: The Guardian



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RE: Yup
By invidious on 3/24/2014 10:19:41 AM , Rating: 2
Unfortunately in many cases the laws are broken on purpose by politicians looking to help their constituants. The root of the problem is greed and a lack of free market oversight.

Government regulation of the market definately has its place, but there should be more free market feedback in the regulatory process. Otherwise you end up in situations where lobbying is more cost effective than innovating, and the only people who benifit from that are the politicians.


RE: Yup
By Solandri on 3/24/2014 3:59:43 PM , Rating: 2
quote:
Unfortunately in many cases the laws are broken on purpose by politicians looking to help their constituants. The root of the problem is greed and a lack of free market oversight.

You're thinking about the problem backwards.

The natural state of affairs is for there to be no taxes. So the root of the problem is always improperly worded or implemented tax laws. Certainly, that improper wording or implementation could be the result of greed or insufficient regulatory oversight, but there's no justification to automatically assume those are the causes.

Once you realize non-taxation is natural, then you realize loopholes are merely areas the tax law does not (yet) cover. You're trying to cover an infinite number of possible situations with a finite number of laws. Of course there will be loopholes, regardless of whether anyone intentionally or unintentionally made them. The best you can realistically hope for is that the vast majority of common situations are covered, and the law quickly amended to patch up any new ones discovered. You're basically playing whack-a-mole.

It's only when you mistakenly assume that taxation is the normal state of affairs, that you erroneously think tax law can be written to cover all cases; and that any loopholes must therefore have been inserted by malicious intent or incompetence. Zero taxation is the only absolute fixed frame of reference. (Please note: I'm not saying zero taxation is the best state of affairs. I'm merely pointing out why any taxation will always be imperfect.)


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