The government is considering extending 2% online sales tax to all small businesses

Online sales tax would be extended to brick-and-mortar stores

The government can extend its proposed 2 percent online sales tax to all small businesses – both online and in-store.

It was highly recommended that online sales be expanded to include sales made online such as travel, lodging, and software.

Around £ 100 billion is spent annually on retailers and the value of all online sales excluding financial services is £ 700 billion, according to the Treasury Department.

This proposal was published in the interim report on the review of corporate rates, to which the Chancellor is to respond in the autumn budget. The report – a summary of company responses – was released on “Tax Day”, a new regime where consultations and reviews are published under the budget.

The Treasury Department is under immediate pressure to cut business rates, raising £ 30 billion a year. However, it has been accused of damaging the high street by punishing physical retailers.

HM Treasury has published a number of consultations and plans to make the tax work in this day and age, and seeks to reclaim £ 31bn each year that is lost due to flaws in the current tax system.

> See also: Kevin Hollinrake calls for the abolition of business rates

“Respondents stressed that all tariff payers in all industries would be granted uniform tax cuts, while online sales tax would only be paid by online retailers, which they considered unfair,” the interim report said.

There was no consensus among respondents about online sales tax as both sides reacted strongly to it.

In response to the report, John Webber, Head of Business Rates at Colliers, said: “Everything that has been said has been said in all previous consultations. It’s like Groundhog Day. “

“We say what we think of what we see in the market and what we think of our customers, we show evidence, the government makes a report and then normally nothing happens. I know the government plans to divulge their thoughts this fall, but I can’t understand why they can’t divulge them now when the evidence is so unchanged.

“But it’s worse than that. At this point, we don’t know if the government will do anything to target the 400,000 office-based companies that are targeting their business rates in the largest customer center caused by a single event in rating history. “

> See also: Appointments on corporate rates have been suspended as thousands of companies await the outcome

Nic Redfern, UK Finance Director of NerdWallet said:The inclusion of a 2 percent tax on online sales is a remarkable moment. On the one hand, it is recognized that the business tariff system is no longer appropriate. It also recognizes the fact that online retailers generally outperform traditional high street vendors.

“One thing is certain: it will require more than 2 percent online sales tax to improve the playing field between online and high street shopping. Additionally, brick-and-mortar retailers will need much more financial support and reforms in the coming months to recover from the effects of Covid-19. It is a key area of ​​the economy that we need to watch closely in 2021. “

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