Tim Bichara

The loophole which allowed 99p Music and eBooks is being closed

We recommend downloading as many deals while you can, because come January 2015 the loophole which allowed companies like Amazon and Apple to offer music and eBooks for prices as low as 99p is being closed.

“George Osborne’s latest budget could spell an end to 99p song downloads by closing a tax loophole that meant consumers were paying VAT at very low foreign rates on online purchases of books, music and apps.”

This will mean when buying music in the UK, companies will be subject to the UK’s VAT rate of 20%, currently companies sell digital downloads through other countries such as Luxembourg which has a much lower VAT of 3%.

We are personally in two minds about this; the VAT could see an increase in prices of these services, which often cut the number of pirated downloads with a more convenient service than torrents could provide.

On the other hand it will mean a lot more money remaining in this country, instead of it being shipped out, so companies can do what amounts to tax evasion.

Research done by Greenwich Consulting had previously suggested the UK could have financed the 2012 Olympics just from the lost VAT between 2008 and 2012. That’s a lot of money right there.

In addition, with both online and local retailers being subject to the same VAT, perhaps we could see local retailers begin to become more prominent again.


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