LONDON (UK) – The United Kingdom is considering tougher tax rules for the so-called sharing economy to lift revenue and ensure a “level playing field” for all businesses, a government paper showed.
In a consultation document published on Wednesday, the UK Treasury said the growth of the sharing economy “could potentially create certain challenges to the VAT (value-added tax) base,” and raised concerns that the current state of affairs might hand unfair advantages to the sharing economy over traditional businesses.
“The government considers that the Sharing Economy not only creates challenges for VAT but impacts upon a range of different taxes,” the consultation said.
When self-employed contractors carry out services booked on platforms like Uber and Airbnb, they often individually fall below the 85,000 pounds ($113,755.50) VAT registration threshold.
The Treasury’s consultation document highlighted examples of the business practices it wanted to look into for action where no VAT was being charged “where it might have been (charged) in the traditional economy.”
The Treasury said its review was designed to “test the government’s view of the VAT challenges the sharing economy creates.”
The International Monetary Fund told Britain late in October to keep up its COVID-19 spending and plan for tax hikes.
Carbon taxes, VAT and property taxes were all areas where Britain could boost revenue without hurting growth. IMF staff had said tax increases would be almost inevitable.