Are we paying too much for Spotify and Netflix?

Friday 17 November 2017

Paying 20% VAT has long been a sensitive subject for islanders, and now the issue has been pushed onto the political agenda as part of Budget 2018.

Goods and services sold in the island should be taxed at 5% GST - but apps purchased through the Apple and Google online stores and online film and television streaming services including Amazon Prime are still being sold to local customers with 20% UK VAT.

That money goes to Her Majesty’s Revenue and Customs instead of remaining in local pockets.

And a local politicians is alleging that the issue extends beyond the app marketplace to the online shopping world. Boots online, eBay, Etsy, Debenhams online, Next online and Sports Direct could all be charging Jersey customers the 20% too.

Pictured: App store purchases should not include 20% VAT, Senator Ozouf argues.

With shipments bound for Jersey increasing from 73,000 to 84,500 between 2013 and 2016 and digital services “increasing exponentially”, Senator Philip Ozouf has described the issue as one “which needs to be dealt with.”

As part of an amendment to the 2018 Budget, he’s now calling on the States Assembly to vote in favour of two proposals for the Treasury Minister to engage with UK retailers to get rid of the excess cost.

“There is a need for a proactive and positive strategy of engagement and awareness-raising with those and major UK retailers who sell into Jersey, to attempt to alert them of our own sales tax rules.

“I understand that such retailers should be provided with help and guidance so that the correct sales taxes are applied,” he wrote in reports accompanying the ideas.

Pictured: Incoming parcels are only supposed to be subject to the island's 5% GST.

He would also like to know whether VAT refunds scheme in conjunction with Jersey Post would be viable.

“I would like to investigate whether Jersey Post could seek to put in place, after discussions with HMRC, a VAT refunds scheme for goods to be delivered to Islanders on a timely basis in return for an administrative fee reflecting the cost of pricing such a service for the delivery of those goods via the Jersey Post’s network at a price VATfree, subject to the prevailing currently Jersey LVCR.” Senator Ozouf added.

While the amendments might make for happy reading for music lovers and binge watchers, they don’t answer or provide a solution to the question of whether digital services should come under the proposed large-scale retail tax - something which Jersey Finance have sought clarification on from the Treasury Minister.

Pictured: The amendments are two of five amendments that Senator Ozouf has proposed to the Treasury Minister's Budget 2018.

The States are due to decide on whether to approve the Treasury Minister’s 2018 Budget - and Senator Ozouf’s new ideas - on 27 November.