The Guardian reports a new budget implemented by U.K. chancellor, George Osborne, could raise prices for digital content downloads by closing a tax loophole. Digital retailers have thus far been able to take advantage of a stipulation that allowed for very low foreign rates, though the newest budget will see prices go up as much as 20-percent of VAT. Those of you who enjoy services from companies such as Amazon, Apple and Google will be effected. The new finance bill is expected to impose the new law next Jan. 1, 2015.
The new law is expected to affect purchases of books, music and apps, although MacRumors notes that apps are typically taxed at 15-percent, so the hike will be minimal. Digital downloads are currently sold through countries such as Luxembourg, where rates are as low as 3-percent. Once the new law is implemented, officials expect an extra £300m for the Treasury. Retailers could absorb those costs, and prices could go unchanged, though there’s a chance the hike could be passed along to consumers. We’ll have to wait for official company responses.
Some have complained that the existing laws have allowed online retailers an unfair advantage over those who sell physical goods. The Guardian notes that research from Greenwich Consulting found that the U.S. was losing more than £1.6bn a year in VAT because of the digital loophole.