The Government notes that the consultation follows a commitment to look into the matter made during the Autumn Budget due to concerns reported by businesses of a ‘potential tax imbalance between in-store retailers and online’. Funds from OST ‘could be used to rebalance the tax system, funding business rates relief for the retail sector’, given the significant changes in the retail market and the shift online.

No decisions have been made on whether to go ahead with an OST, or its scope if it were to be introduced. However, the consultation notes that the OECD’s definition of an e-commerce transaction provides an example of a definition that could be used: “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders”.

The consultation notes that it ‘is a matter for debate’ whether the digital products of ‘tangible equivalents’ (such as online magazines or online subscriptions) should be considered equivalent to their offline alternatives for the purposes of an OST.

Services which can be provided both online and offline, such as media services. could generate a ‘great deal of uncertainty and complexity’ when developing the scope of an OST. Media services are singled out as a particularly difficult case as 'it is not settled to what extent online media services compete with in-person consumption of media.' For example, online subscriptions could be considered both an equivalent to purchases of physical newspapers and also complementary.