Measure
Following consultation, the government has decided not to introduce an online sales tax (OST), an idea which had been put forward by certain stakeholders in the context of Business Rates reform.
The government states that this decision reflects concerns raised about the complexity of an OST alongside the risk that it could create unintended distortion or unfair outcomes between different business models. The original consultation was launched in February 2022 when it was stressed that the government had not decided to proceed with an OST and that the consultation was intended to explore the arguments for and against an OST.
The government has stated that an OST will not be pursued and that a fuller response to the OST consultation will be published shortly.
The announcement that there will not be a new OST, which could have been costly and complex to implement, will be welcome to potentially impacted businesses during a time of significant international tax change. However some stakeholders may consider that this fails to address an imbalance in the current system, with bricks and mortar retailers overburdened by business rates compared to online-focused sellers.
The announcement that there will not be a new OST, which could have been costly and complex to implement, will be welcome to potentially impacted businesses during a time of significant international tax change. However some stakeholders may consider that this fails to address an imbalance in the current system, with bricks and mortar retailers overburdened by business rates compared to online-focused sellers.