UK Government Looking To Apply 20% VAT To Digital Downloads

For the most part, Apple’s iTunes App Store downloads are more or less valued the same based on the price of $0.99. Of course there will be differences due to the currency conversion, but for the most part they remain somewhat affordable. However it seems that in the UK, there is a chance that UK iTunes App Store users could face a price hike of 20% which is basically the country’s “value added tax”.

Why is this? Well at the moment app stores like those by Apple and Amazon currently exploit a tax loophole which allows digital downloads, like apps, music, and books to be downloaded and bought without having to pay the 20% VAT, which in turn allows them to pay much lower international tax rates.

It seems that members of the UK government aren’t too pleased by this and rightfully so, since taxes are one of the ways that governments fund themselves, so by allowing companies to skirt around VAT, well that’s just less money for the government at the end of the day.

Assuming this push by members of the UK government to close the loophole is successful, UK iOS users (and potentially users of other smartphone platforms that downloads apps) could end up paying more for their apps, music, and book downloads.

Thankfully this new law won’t be going into effect come 1st of January 2015, so there is a chance that things could change or the law could be repealed along the way. Supporters of the change claim that this will make things fairer especially since locally-based companies are subject to the 20% VAT themselves.

 

Tyler Lee
Categories: Cellphones
Tags: Apps, Legal