Thursday 16 January 2020 12:59 pm

Amazon says UK tech tax could hit small businesses

Amazon’s UK boss has played down concerns about a new tech tax, but warned the move could raise costs for small businesses using its platform.

The government’s 11 March Budget is expected to include a digital services tax, which will charge a two per cent levy on the UK revenue of technology companies.

Douglas Gurr, Amazon’s UK country manager, said the tax would not impact plans to create new jobs and open more distribution hubs.

“We are very committed to the UK for the long term. We have three research and development sites and two corporate offices,” he told the Financial Times.

“As long as the UK continues to be a place where we get great talent and we have customers to serve, we will continue to be committed.”

However, Gurr suggested that Amazon could offload the additional costs by raising charges for the small businesses that use its platform.

“If you are not careful in the design, these taxes can actually directly hit all of the small businesses that use our services,” he said.

 “The majority of sales on our marketplace are independent businesses. If that tax is passed on to them, that is quite a significant hit.”

In July last year France introduced a three per cent tech tax on digital companies, prompting Amazon to hike its seller fees by the same amount.

Gurr said that the UK should shun its plans for a national tax in favour of a “supranational approach” similar to cross-border proposals put forward by the Organisation for Economic Cooperation and Development (OECD).

The government has vowed to implement the new tax in April, saying it will pull in roughly £500m per year. However, the move risks sparking anger with the US, which has argued the measures unfairly target American companies.

The reforms come amid accusations that tech giants such as Amazon, Google and Facebook dodge taxes by booking their profit in low-tax countries such as Ireland, despite serving customers around the world.