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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 drycrust3 on 3/24/2014 12:04:37 PM , Rating: 2
quote:
They are complaining for others to fix something that only they, themselves, can fix. The real issue is was the loophole intentional?

No, the real issue is does the loophole exist, and it does, therefore, as the original poster says, the Board of Directors have an obligation to do what is best for their shareholders. Obviously breaking the law isn't what is best because the corporation will be heavily fined for doing so, but doing things that are legal, don't cost a lot and save a huge amount in taxes is, therefore they have to exploit loopholes. How the loophole got there is immaterial.
The interesting thing here is what is the leverage that the British taxation department has that "encourages" these corporations to gather the taxes? A normal British business owner, if they refuse to collect taxes, knows they can have assets seized and could end up in jail if they do refuse, so they have little choice but to follow the law. So what is the leverage the British Crown uses for these corporations? The only thing I can think of is some British department has the authority to ban British ISPs from sending traffic to certain IP addresses, so if Google, Apple, Amazon, etc, don't collect the taxes then they could find their IP addresses banned and not get much business from the UK.


RE: Yup
By hughlle on 3/24/2014 3:31:40 PM , Rating: 2
The end user pays for this, not the company, so no oubt they don't have that much of an issue agreeing to this. I'm sure that they also have no issue agreeing to this so long as they're based in Ireland etc and get to pay a fraction of the corporation tax they would have to should those loopholes be closed.


RE: Yup
By futrtrubl on 3/25/2014 12:43:03 AM , Rating: 2
They would have an issue with it as they would have to either decrease their margin (loose profit, ouch) or raise prices to consumers which would make them loose customers as they would be less competitive than before compared to domestic companies that have already been paying.


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