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Budget announcement could put an end to 99p songs

by Sable International | May 19, 2014
  • In his recent Budget Speech, George Osborne effectively closed the loophole that allows buyers of digital download products to pay VAT at low foreign rates on their purchases. From 2015, virtual purchases will be taxed in the country they are purchased in.
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    iTunes, amazon, Google Play, Sony's Entertainment Network and other digital retailers will have to start charging 20% VAT from 1 January 2015, most likely driving up the price of digital downloads and spelling an end to 99p songs on iTunes.

    The UK government estimates that the move could raise an extra £300m in tax revenue for the Treasury. 

    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."

    Research conducted by Greenwich Consulting has suggested that the UK could effectively have financed the Olympic Games from the VAT lost on digital sales between 2008 and 2014.


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