Budget 2017: Government Will Impose VAT On Mobile Roaming Outside EU

Brits will be charged VAT on the cost of roaming outside the European Union (EU) as the government seeks to raise revenues and close tax loopholes.

At present, mobile users are charged VAT when they use their mobile phone within the EU’s 28 member states, but not when they roam in countries like the US or Australia.

Chancellor Philip Hammond made the announcement in Parliament during the presentation of his 2017 budget, claiming that the measure, along with other tax initiatives will raise £820 million for the Treasury.

Roaming VAT

“This will resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU,” said the Budget documents. “It will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT. This will bring UK VAT rules into line with the internationally agreed approach.”

The cost of roaming across the EU is set to be abolished entirely from June, although it has been confirmed that the UK will not benefit from the regulations when it leaves the EU unless it forms part of negotiations for a settlement.

The regulations have been opposed by the mobile industry, which fears a loss in revenue.
It is estimated that roaming revenues within the EU could fall by 28 percent from 2017, but Juniper Research says income will recover in the medium term once people start to become more comfortable using their phone abroad.

Other studies suggest fear of bill shock means many travellers turn roaming off and use Wi-Fi or even switch their phone off entirely when abroad, meaning no revenue is generated for operators. Some, most notably Three, have made inclusive roaming a feature of their contracts.

However the addition of VAT will make it more expensive to use mobile services unless operators reduce their margins.

There was plenty for the tech industry in the Budget, includng funding for 5G, artificial intelligence and digital skills.

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