Most UK retailers support an online sales tax, according to new research. The survey of retail landlords and retailers found 89% of respondents back the proposed tax.
The research follows the UK government’s public consultation on the proposed tax. The consultation closes on 20 May.
What is the purpose of an online sales tax?
The rise of e-commerce has seen a corresponding decline in brick and mortar retail sales. Of course, the decline of the High Street retailer has a number of complex causes, of which online shopping is just one.
However, the broad thinking behind the online sales tax is that it would create a more level playing field for physical online stores.
Experts have anticipated the possibility of an online sales tax for some time now. However, commentators point out that implementing a tax on online sales is hardly straightforward. Defining precisely when a sale takes place online is more complex than it sounds, especially when a retailer has both an online and physical presence.
In addition, some analysts point out that small retailers need to be supported in developing their own online presence.
Digital tax for a digital economy
E-commerce and online services have disrupted the global economy in various, complex ways. Tax authorities are adapting their regulations to meet the challenges of a digital economy.
For instance, the ease with which a company can supply electronic services to a global customer base raises specific challenges. After all, we now live in a world where a company based in Stockholm can seamlessly supply music streaming to customers in Lagos, Paris and Bangkok.
To create a more level playing field between local and foreign businesses, many governments now impose digital services VAT on nonresident companies.
For businesses that supply services on the internet, the upshot is that you are now much more likely to face global VAT obligations.
An integrated online compliance solution
If you run a business online, there’s no room for compliance complacency. As VAT rules and compliance regulations change, you need to ensure your business meets the new requirements. After all, even unintentional noncompliance can lead to fines, penalties and even legal action.
VAT IT’s fully automated end-to-end one-stop-shop for global VAT compliance solution ensures your business is always one step ahead of changing regulations.
Get in touch for a tailored VAT solution designed to help your business meet the challenges of the global economy.