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A collection of the brief insights throughout February 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

28 February 2022 - UK publishes consultation for an online sales tax

HM Treasury has published a consultation on the introduction of an online sales tax (OST). Levied on online retailers (and possibly service providers), the OST would raise revenues to fund a reduction in retailers’ business rates. The underlying reason being that the burden of business rates is thought of falling disproportionately on retailers. The precise nature of associated business rate reductions will be considered at a later date, if the government chooses to implement an OST.

The consultation will close in 12 weeks, on 20 May 2022.

The Government has not yet decided whether an OST will become part of the UK tax system. The consultation seeks views on this point too by soliciting input on the case for and against implementing such a tax. There are 40 questions in the consultation seeking views on the scope, the design and the possible impacts, such as for example:

1) Which goods and services would be in-scope of the tax?

2) How does one define an online sale and should this extend to ‘remote’ sales made by phone or post?

3) What would be the distinction between a reservation and a completed transaction for the purposes of an OST?

4) Would any exemptions be appropriate, such as for click and collect purchases or for certain goods and services?

5) At what point in the transaction would an OST be levied – consumer, or vendor? And what would be the role of intermediaries such as marketplaces?

6) What would be the territorial scope of an OST and how would crossborder sales be treated?

7) Would a threshold or allowance be appropriate to account for smaller firms or those with a lower proportion of sales made online?

8) How would an OST be reported to tax authorities and what would the payment schedule be? And what data and systems would be required?

The envisaged rate is between 1% and 2%.

23 February 2022