New Tax Law In UK Will Increase iTunes And App Store Prices By 20 Percent

Apple iTunes customers in UK might be see a little increased price in app purchase and digital goods by next year when the new Tax Law is UK will take effect. Currently the digital download retailers like iTunes and Amazon in UK avoid the 20% VAT by selling from other countries like Luxembourg where the VAT is  3% - 15%. UK government will now close the tax loophole resulting in 20% higher price in purchases from iTunes or any other online retailer avoiding 20% value added tax. The news was first reported by The guardian where George Osborne -the Chancellor of the Exchequer and Second Lord of the Treasury of the United Kingdom will be applying the new laws by 2015. He would use this year's finance bill to impose the new law from 1 January 2015.

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."

Still they have an year to apply the law, so things might change, however with 20% VAT UK-based online digital companies will be facing disadvantage. iTunes customers can buy cheap music and digital goods from USA ,same goes for Amazon. According to the supporters of the new law, it will bring more fair competition among foreign and domestic companies.