Wednesday 5 August 2020 11:37 am

Amazon to pass on UK digital tax to sellers in fees hike

Amazon is to increase seller fees next month, saying it will no longer absorb the UK’s digital services tax after talks with the government failed to progress.

The e-commerce giant said it had taken on the impact of the digital services tax — a two per cent levy on the firm’s annual revenues — since it was announced, but would now pass on that cost to its customers.

It did the same in France last year, after the country passed a three per cent digital tax on technology businesses with yearly revenues of more than €750m.

“While the legislation was being passed, and as we continued our discussions with the government to encourage them to take an approach that would not impact our selling partners, we absorbed this increase,” Amazon said in a note to sellers today.

“Now that the legislation has passed, we want to inform you that we will be increasing… fees by two per cent in the UK to reflect this additional cost.”

The move will affect Amazon’s referral fees, fees for fulfilment by amazon —which includes storage, where sellers use Amazon as a logistics partner for their products — and multi-channel fulfilment fees, and come into effect on 1 September.

Global discussions for a digital services tax solution by the OECD have stumbled in recent months, after the US said it would pull out of the talks.

US treasury secretary Steve Mnuchin said the legislation will unfairly target American companies, while critics say those businesses are profiting from local markets while making only limited contributions to the public purse.

The UK’s digital tax is intended to be temporary until a global agreement is reached, placing a two per cent levy on companies that operate search engines, social media websites and online marketplaces with revenues above £500m.

A report from Moody’s last month said the impact of an Europe-wide digital tax would be “limited”, given smaller companies would likely be harder hit than the larger ones it is aimed at.

An Amazon spokesperson added to today’s announcement: ““Like many others, we have encouraged the government to pursue a global agreement on the taxation of the digital economy at OECD level rather than unilateral taxes, so that rules would be consistent across countries and clearer and fairer for businesses.

“As we’ve previously indicated, the way that the government has designed the Digital Services Tax will directly impact the businesses that use our services.”