The Cost of Digital Downloads May Rise in 2015 Thanks to Changes in VAT Law in UK

itunesRight now, the average cost to download a new song in the UK is £0.99. Thanks to recent regulation changes by Chancellor George Osborne, the cost to download a new song in the UK could shoot up by as much as 20 percent by 2015. A new law has been passed to ensure that the value-added tax (VAT) rate is enforced across the globe.

According to The Guardian, Osborne recently announced that he would use this year’s financial bill to impose a new law that would ensure that Internet downloads are taxed in the country where they are purchased.

Osborne’s announcement reads:

“As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue.”

Research from Greenwich Consulting noted that Britain could have financed the Olympic games from the VAT it lost of the sales of digital services from 2008 to 2014. The country lost more than £1.6bn on digital services in 2012 alone.

The increase in taxation will undoubtedly have a direct impact on the cost of the download. Apple will raise the price of music in order to compensate for the 20 percent tax fee. Whether the rest of the world will see the price hike is yet to be seen. However, Apple likes to keep things symmetrical across all stores in all countries. It is likely that we will see a 20 percent increase in downloads everywhere in order to maintain a cohesive pricing plan.

Would you pay $1.59 for the Lorde’s next hit song? It doesn’t seem that high at a per-song price.

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About Lory: Writer of all things app related, traveler of the space-time continuum, baker of really great cookies. Follow me @appaholik