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By by Amanda Banks, Tax-News.com, London
21 July, 2017
HM Revenue and Customs (HMRC) has released guidance on a change to value-added tax rules to tax services used outside the EU by UK consumers.
The changes, which were introduced in the Spring Budget 2017, will affect suppliers of mobile telecommunication services, private consumers, and non-business users who consume telecommunication services outside the EU.
The measure will bring the UK treatment of these services in line with internationally agreed guidelines. It means that UK VAT will be charged on roaming services used by UK consumers outside the EU.
Currently UK VAT is charged when UK consumers use their mobile phones within the EU (including the UK) but, because of the "use and enjoyment" rule, it isn't charged when they use them outside the EU, HMRC said.
The agreed international approach is now to tax mobile phone use in the country where the user of the phone lives. HMRC said that this means that a "use and enjoyment" rule is no longer necessary and may result in double taxation. The UK already adopts this new approach for EU use. The measure introduces the same treatment for non-EU use, the authority said.
The new rule will come into effect on November 1, 2017.
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