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Government allays fears of online sales tax

THE PROSPECT of an online sales tax appears slim after Treasury minister David Gauke suggested the government prefers a common base for different market channels.

In a letter seen by the Sunday Telegraph, Gauke said that moves were being made with the Organisation for Economic Co-operation and Development (OECD) to seek agreement on how businesses operating across borders are taxed.

“Many online businesses operate across international borders and it is therefore important to have international agreement on the principles of how multinational businesses, including online, are taxed,” Gauke wrote.

“However, we favour an approach which aims to ensure common principles apply to all businesses whether operating online, from physical premises or with a combination.”

The Treasury had received its own letter several weeks ago from major online retail heads, including those from Ocado and Boden, warning that an online sales tax would damage the UK economy.

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