Chancellor George Osborne is aiming to close a tax loophole that allowed companies to charge online customers VAT at low foreign rates. At the moment, web firms such as Apple and Amazon are selling digital downloads through countries like Luxembourg, where the tax rate is as low as 3%, instead of paying the U.K.'s 20% rate.
The budget document reads:
"As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue."
It's estimated that the move could raise an extra £300m for the Treasury.