This policy is aimed at making the taxation system fairer for all businesses by ensuring that online businesses pay a “fair” amount of tax. It is one in a series of policies aimed at the digital economy.
Currently, the issue is that many online businesses either do not have to pay business rates or pay a relatively low business rate. But why does this happen? Business rates are based on the value of a business property. An online business can locate itself in a lower cost area where the property is less expensive and hence pay a lower business rate. On the other hand, business rates are higher for regular businesses because they need to locate themselves in a busier, higher cost area such as the high street in order to attract customers.
So what’s happened? The government has promised to review business rates more frequently, but this isn’t something that will address business rates for online retailers. We have had no specific action on this, though we do know that the Chancellor is still considering it, the high-street retailers still want it, and online retailers still don’t.
But without evidence of official government action to progress this, we’re marking this as ‘not started’. Follow this policy for updates.
Review the detail…
- Corporate tax and the digital economy: position paper – Gov.uk
- Tax on shopping and services – Gov.uk
- Philip Hammond signals ‘Amazon tax’ as high street retailers feel the pressure – The Independent
- Retailers call for online tax to solve business rate inequality – Fashion United
- Ecommerce tax would be bad for UK retailers says study – Startup Donut