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EU Rules Mean An Online Sales Tax Would Likely Be Illegal

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According to an article in The Times, the financial secretary to the Treasury believes that an online sales tax would breach EU rules.

The draft EU withdrawal agreement shows that Britain has accepted “dynamic alignment” with the EU on state-aid rules, post-Brexit.  Mel Stride, financial secretary to the Treasury, has written to the Treasury Select committee to say that there is a "high risk" that imposing an online tax would breach these rules.

Excerpts from the letter include: “Tax proposals have been judged to constitute state aid in the past . . . This [online sales tax] could distort competition.” 

“The government considers there a high risk that such a tax would be found to be state aid.”

Sources have said that the Treasury is not ruling anything out but analysts believe a tax is unlikely to go ahead. 

Retail CEOs Dave Lewis and Mike Ashley are among those calling for the tax to help high street retailers compete with online merchants. Tesco's Dave Lewis suggested a 2% sales tax while Sports Direct's Mike Ashley suggested a tax should be imposed on any retailer which has more than 20% of its turnover online.

Last summer, in an interview with Sky News, Chancellor Philip Hammond suggested that an 'Amazon tax' might be in the pipeline.  At the time, he said: “We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online.”

The IMRG Capgemini eRetail Sales Index for December reported that even online retail sales growth hit an all-time low of just +3.6% year-on-year (YoY) in December, as the industry experienced a tough Christmas trading period to end a challenging second half of the year.

Source : Insight DIY Team

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26 January 2019

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