Mar 22, 2021
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UK to delay online sales tax decision

Mar 22, 2021

With lobbying regarding an online sales tax – both for and against – continuing, it seems the UK government remains unwilling to commit itself to any action yet. News this week suggested that Chancellor Rishi Sunak could wait until the autumn before making a decision.

The UK government could delay a decision on an online sales tax for now - Photo: Public domain/Pixabay

The FT reported the Chancellor wants to wait until the US government commits to supporting efforts to reform global digital tax rules or not. These efforts are currently being led by the OECD. It said the chancellor’s allies say he wants to see whether US Treasury secretary Janet Yellen will back a global approach to a digital services tax.

The Chancellor is due to publish a range of tax consultations and other information on Tuesday and the newspaper said that he could share information regarding the thorny issue of business rates at the same time.

Businesses remain deeply divided over the prospects of an online sales tax that would be intended to level the playing field given that physical retailers have to pay a heavy burden in business rates that isn't shared by online retailers.

However, while pureplay e-tailers are clearly against such a tax, given that many physical retailers also have thriving online operations, they have mixed feelings.

They’re less ambivalent about the issue of business rates though, with almost universal calls for a drastic reform of the system that sees store-based retailers carrying much of the burden of this key stream of tax revenue.

At the moment, business rates generate around £30 billion in revenue for the Treasury a year, although retailers say they have to carry a disproportionately large burden of these compare to other businesses. 

Meanwhile, the current digital services is expected to raise about £500 million by the end of the current Parliament. And a 2% levy on goods bought online could bring in a further £2 billion a year, the FT said.

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