Amazon to escape paying digital services tax

Amazon to escape paying digital services tax

Amazon will not have to pay the new digital services tax on goods it sells directly but traders using its marketplace will face the charge, it has been reported.

The tax, announced in April, was billed by as a way to ensure online giants paid “their fair share” towards the public coffers.

However, Amazon will not pay the tax on goods it sells itself but the 2% charge will be made on revenues from third-party traders, the Times reported. The company has already announced the cost will be passed on in higher fees to sellers but not to advertisers.

Andrew Goodacre, chief executive of the British Independent Retailers Association, told the newspaper: “All it has done is resulted in small sellers paying more and making less while Amazon gains further competitive advantage.”

Labour MP Margaret Hodge, who chairs the Tax In Parliament group, tweeted: “Absolutely appalling that Amazon is not only passing the digital services tax levy on to small businesses, it’s totally exempt from the tax on products it sells directly. We urgently need new & innovative ways of taxing the Big Tech companies. But HM Treasury has bungled this one.”

In 2019, Amazon paid just £293m in direct taxes on surging UK sales of £13.73bn. The firm argues the amount it pays in indirect taxation such as VAT gives a different picture of its contribution.

A spokesman for Amazon said: “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.”