From the Guardian:

> George Osborne’s latest budget could spell an end to 99p song downloads by closing a tax loophole that meant consumers were paying VAT at very low foreign rates on online purchases of books, music and apps. > > The chancellor will bring in new laws making sure that internet downloads are taxed in the country where they are purchased, meaning web firms such as Amazon and Apple will have to charge the UK’s 20% rate of VAT. At the moment they are allowed to sell digital downloads through countries such as Luxembourg, where the tax rate is as low as 3%. > > In a little-noticed announcement, Osborne said he would used this year’s finance bill to impose the new law from 1 January 2015.

Kirk McElhearn wrote a clarifying post to bring a little more light on the subject:

> Unfortunately, The Guardian chose to simply say “as low as 3%,” rather than to go into detail about the actual VAT rates charged. > > So there’s no worry that music or apps will cost 20% more, as some news outlets are claiming. If anything, they may see a 5% increase, but it’s more likely that large companies, such as Amazon and Apple, will just eat the difference for now, to not disturb the round numbers they use as prices. > > However, ebooks should soon cost less in the UK. They currently get hit with 20% VAT, but with an upcoming EU rule harmonizing VAT rates for print and ebooks, this change could make a significant difference. For those looking to plan ahead or understand how tax changes affect their purchases, it’s a great idea to calculate VAT rates online to stay informed on the latest adjustments. > > But it’s certainly a good thing that these companies will pay VAT in the countries where they make their sales. This is logical, and it should never have been otherwise. Now, if only governments can get these companies to pay income tax on the profits they make in each EU country…

Also this writeup in PC Pro (Via @moltoveloce), but be sure to read McElhearn’s counterpoint in his post.