British consumers face iTunes price hike after UK tax policy change

“Apple may be forced to increase the amount of Value Added Tax that it charges for iTunes music and video sales in the U.K. as Her Majesty’s Treasury pushes to end tax loopholes that allow consumers to pay much lower rates on digital purchases,” AppleInsider reports.

“The new law, backed by Chancellor of the Exchequer and Second Lord of the Treasury of the United Kingdom George Osborne, would end a policy that allows Apple to sell downloads through EU countries like Luxembourg with VAT rates as low as 3 percent,” AppleInsider reports. “Instead, Apple would have to levy the U.K.’s full 20 percent VAT for purchases in Britain, according to The Guardian.”

Read more in the full article here.

In a little-noticed announcement, Osborne said he would used this year’s finance bill to impose the new law from 1 January 2015,” Rowena Mason reports for The Guardian. “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.'”

Mason reports, “Official estimates suggest the move could raise an extra £300m for the Treasury. Online retailers could pass on those costs to consumers in the form of higher prices.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

58 Comments

    1. How do you arrive at that conclusion? Is it because they have a national health plan? Is it because they collect taxes to pay for government services like the military? Is it because they have a government run school system? Oh, Wait! The US has the same thing.

      1. We know your queen has been spending money lavishly to support an antiquated lifestyle and now needs to close loopholes and collect more taxes to pay for it all.

        So instead of the 3% VAT the Treasury will raise it to 20%. I guess you’re okay with that one huh?

        1. In case you didn’t know, the Queen has zero influence on government policy and is merely a figurehead.
          Although I have no doubt that there is some fiddling behind the scenes, it doesn’t extend to taxation policy.

          At the last election, the Tories claimed they would not impose any rise on the rate of VAT nor would impose student fees on higher education. As soon as they got into power and in bed with the Liberal Democrats, that policy was shown to be an utter lie.

          Lawyers have more ethics!

          =:~)

        2. You have inadvertently revealed you complete lack of knowledge of other countries of the world. Unfortunately, it is common among people from the US to not only have no knowledge of the rest of the world but sadly the also don’t even know much about the US states that border their own state. Education is a precious thing.

  1. Should five percent appear too small
    Be thankful I don’t take it all
    ‘Cause I’m the taxman
    Yeah, I’m the taxman

    (If you drive a car)
    I’ll tax the street
    (If you try to sit)
    I’ll tax your seat
    (If you get too cold)
    I’ll tax the heat
    (If you take a walk)
    I’ll tax your feet

  2. Typical British socialism at work. Levy maximum taxation on honest hardworking individuals so the government can piss away the money on various do-gooder socialist schemes.

    What they don’t understand is reducing taxation encourages consumption and raises net tax receipts. But the failed communists in Britain pursuing failed socialist strategies have no option but to place an increasing tax burden on honest citizens so the lazy, unemployed and unmotivated can be supported by the socialist state.

    Britain operates a form of Obamacare, a socialist national health care system which drains the public purse with no commensurate improvement in the quality of health care.

    1. Health care should be a right for every person in the world. Those of you who think that it is OK for the poor to die might think about plagues and influenzas that reduce the economic output of every nation. Caring about your fellow man is a strategy for success. Even your beloved military believe that it is a strength to take care of every soldier and at least bring them home. Selfishness is a poor stately for global success. Think about it for a while before responding.

            1. Agreed, except I’d pinpoint the neo-cons. That includes their little hand puppet ‘Tea Party’. Deliberate stupifaction of others never makes me smiley.

              As a few have pointed out here, source conservatives are a different breed, typically with at least a remote sense of morality and respect.

        1. Are you saying the the poor should die and get on with it? Are there no poor houses? Are the prisons in good working order? Tiny Tim doesn’t deserve health care because it is a privilege. Sad statement you seem to be making.

      1. The government can take responsibility for health care when it has the power to dictate healthful eating habits, outlaw smoking, excessive drinking, etc. Until then, your fellow man shouldn’t have to bear the burden for your lack of personal responsibility.

        1. We both agree with taking responsibility for our actions and yet there is room for compassion and forgiveness. Education is the solution to the evils you write about, not legislation. The world is moving through a process of freeing ourselves from the tyranny of ignorance and poverty. Get with the program.

    2. @ The chosen one — Learn the difference between socialism and neo-liberalism.

      FYI, every £25,000 of taxable income in the UK is apportioned thus:

      £2,080 Pensions and Benefits
      £1,094 on the NHS
      £824 on Education
      £339 on Defence
      £160 on the Police
      £44 on Prisons
      £92 on Roads
      £71 on Railways

      According to the latest figures for the President’s Proposed Discretionary Spending for fiscal 2014, healthcare programs account for 5%, or slightly more than what we spend on healthcare—and we provide our healthcare free at the point of delivery, a fact that both my partner and I are grateful for.

      Meanwhile, Discretionary Spending on the military accounts for 57%. Personally, I know where I’d prefer my taxes to go!

      =:~)

        1. Amen, brother (or sister). The money lavished on maintaining that bunch of inbred mutants aka The Royal Family sickens me.

          Having said that, the millions that were spent on the funeral of that doyen of neo-liberal politics, Margaret Thatcher, had every single ex-miner in County Durham howling in protest.There were quite a few who made the trip to London just to ensure that the coffin lid was nailed firmly shut!

          =:~)

        2. Er no.
          Lavish weddings are for Yanks and others to “grab a picture’ for their holiday album or for TV rights sold worldwide. Tourism draws far more money than the royal events cost to stage.

          But this thread is about companies paying taxes in the country the item is bought and not permitting a European internal market in corporation tax rates. Lets hope Amazon and Starbucks are next.

  3. So the theory is that reducing tax percentages increases overall tax income by increasing the amount of money spent that can be taxed? Sounds similar to the theory that Apple should reduce their prices so that they sell more and make more profit. Of course, that’s what Samsung does and Apple make more money than them.

    I’m no fan of taxes, certainly not high taxes, but I also realise they are a fundamental requirement of any society. Certainly there should be reform to a system which appears universally broken, certainly the way taxes are spent needs to be managed better, but I don’t should socialism at every opportunity and argue that taxes should effectively be nothing.

      1. I see very few people asking for limited government doing anything to actually work towards that. Mostly it seems to be people just trying to block everything. Any changes to the extent that people want have to be gradual, western society as it is has gone too far down a road to just turn around and change routes. Effective revisions are needed to correct things a bit at a time. So much of politics seems to be entrenched in this binary thought process of right or wrong, and it just isn’t that simple.

    1. No. If you do business in UK then you should pay UK taxes like all resident businesses. We should not permit the bloody Luxemburgers or the Irish to offer cut rate tax loopholes for sales to people living in the UK , just because the company has an office in another European country.

  4. I would hope that they wouldn’t just increase prices flat out. Firstly because 99p is just a made up number to keep it under a pound. Secondly, it will also apply to albums, and if they go up by 20% or so they won’t remotely compete with CD’s and I’ll just go back to buying them all the time. Not that I buy many albums from iTunes, because typically I can get them cheaper from Amazon, with an mp3 copy (saving me a small amount of time ripping it), or other retailers.

  5. British consumers and the rest of the world for that matter, don’t share the same experience in Apple products and services as we do here in America.

    Americans are enjoying the real deal, shortcomings and all, however you foreigners have to endure layers of policy and propaganda piled on top of the American brand.

    I think anyone of you who live outside of America were to experience Apple products first hand you’d know your version to be an inferior knock off of the original.

    Because of foreign governmental intervention and imposition, Apple and many American companies like them, are forced to “dumb down” its products in order to deprive you of freedoms not granted in your country.

    It sucks to be you!

    1. What a load of cobblers.
      Designed in California ( by a Brit) and made in the Far East for sale worldwide.
      The issue is Apple securing deals with US companies for media provision that are not in place for other markets. The same issue with XBoxOne and plenty of other items

      1. You know I’m right. You aren’t getting your money’s worth because of your own government’s desire to siphon off revenue.

        American companies want you to get the whole experience, but their hands are tied by not only our government regulations, but yours as well.

        You’re all getting a double dose of the stupidity.

        Like I said, sux to be you.

        1. Err, how is my “experience” of an Apple product as a Brit any different from yours? I choose Apple kit because it’s the best in the world. Whether it costs more more or less as a percentage of my gross income is utterly irrelevant as is, ultimately, what our idiotic government decide to charge us in taxation at the point of sale.

          Is it onerous? Yes! Do I care? Not really!

          =:~)

  6. Actually us Brits may save money on this news. As I understand it, Apple cunning charges us the 23% Sales tax applicable where their European hq is … The Republic of Ireland , but then PAY sales tax in Luxembourg where it’s only 3%, pocketing the 20% as profit.

    1. I think you are mixing up sales tax (vat) with the corporation tax liability on profits . It is e latter which Apple pay in Ireland where it is cheaper at 12% than it would be if they declared their profits on sales in Uk to Uk customers and paid it in UK to the UK government. As it is, Apple are paying money to the Irish government that should be paid at a higher rate to rhe UK. This is true of many US conpanies rhat are Headquartered in Ireland. I remember buying a Gateway computer that came from Ireland many years ago.

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