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New UK Tax Laws May Cause iTunes Price Hike for British Consumers

New UK Tax Laws May Cause iTunes Price Hike for British Consumers

Consumers in the UK may be hit with a price increase in Apple’s iTunes and App Store next year when new tax laws take effect.

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The Guardian, (via MacRumors) reports that the most recently introduced budget closes a loophole that allowed no taxes on digital downloads.:

The budget document 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.”

Purveyors of digital downloads currently avoid the UK’s 20% VAT by selling from other countries where the tax rate is much lower. Under the new law, downloads to UK customers will be hit with a 20% tax rate. Apps customers will see the least increase in price, as they are currently taxed at a higher rate of 15%.

The change will take effect on January 1, 2015, and should affect the downloading of apps, e-books, and music.

  1. Rich Stakounis says:

    According to the iTunes T&C’s UK customers are currently paying the VAT from Ireland (23%). So this legislation will reduce the VAT amount paid in the UK

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