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October 15, 2020 06:05 pm

Amazon To Escape UK Digital Services Tax That Will Hit Smaller Traders

Amazon will not have to pay the UK's new digital services tax on products it sells directly to consumers but small traders who sell products on its site will face increased charges. From a report: The tax, which aims to get tech companies such as Amazon, Google and Facebook to pay more tax in the UK, is forecast to eventually bring in about $645 million annually to the exchequer. Amazon has already stated that the 2% tax on revenues made in the UK will be passed on to sellers but it will not be adding the charge to the cost of advertising on its platform. According to a report in the Times, Amazon, which paid only $18.5 million in corporation tax on total UK revenues of $17.7 billion last year, will not have to pay the tax on goods it sells directly. The new tax is not being levied on sales, which would also penalise online retailers such as Tesco and John Lewis, but on the service fees that companies such as Amazon and Google charge third parties. With Amazon's third-party sellers facing a 2% rise in the amount they pay, the US retailer is effectively getting a price advantage on competing goods it sells directly to consumers. "This seems to me to be absolutely outrageous," said Lord Leigh of Hurley, the Conservative peer and former party treasurer, in the House of Lords. "It is clear that the UK government is not taxing Amazon properly and is allowing it to avoid tax on its own sales through the marketplace."

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