An online sales tax in the UK will now not be seen until at least autumn as the government delays making any decisions for six months.
Many expected the online sales tax, or ‘Amazon tax’, to be announced during the Spring budget earlier this month, but retailers were left waiting as no mention of the proposed levy was made.
The controversial tax, which aims to level the playing field between struggling high street retailers and big online players, is now being delayed until the United States makes their position clear.
Chancellor Rishi Sunak is understood to be waiting for President Joe Biden and his administration to reveal whether they will support global efforts to reform digital tax rules being spearheaded by the OECD.
READ MORE: Online sales tax would be a “huge mistake” as industry splits in support for controversial levy
According to the Financial Times, government sources said Sunak wanted to see whether US treasury secretary Janet Yellen would back this global effort at the G7 summit taking place in June.
The OECD’s proposed global strategy would introduce a global minimum corporation tax rate and enable countries to tax multinational companies’ global profits based on where their customers are located.
Despite this the UK’s online sales tax could target more domestic companies which sell online, a controversial concept which has split support across the retail sector.
While British retailers almost unanimously agree that business rates desperately need reforming, few agree on whether an online sales tax is an effective solution to balance the playing field between physical and online retailers.
Many have warned that this could not only actually raise taxes for physical retailers like John Lewis and Next which have significant online operations, but would also hamper independent retailers at a crucial impasse for the British economy.