As predicted, Amazon passes on 2% sales tax onto small businesses

Amazon tells small businesses selling through its platform that it is increasing its fees by 2 per cent to cover cost of Government digital sales tax

Entrepreneurs say that Amazon has “shafted” small businesses by passing on the Government’s new 2 per cent digital sales tax.

Instead of forcing the internet giant to pay its fairer share of corporation tax, all the new digital sales tax has done is hiked up fees to sellers, “punishing small businesses in a crisis,” according to Amanda Thomson, founder of Thomson & Scott, which sells alcohol-free and sparkling wine on Amazon.

The Government launched the 2 per cent digital sales tax in April with the aim of getting internet giants to pay their fair share of tax. At the time, Amazon UK country manager Doug Gurr warned all that would happen was that his company would pass the levy onto its small business sellers, which is exactly what has happened. The same thing happened in France.

>See also: Amazon retailers could find their businesses blocked in a no-deal Brexit

Amazon has told UK small businesses using its services to sell products that it will increase its fees by 2 per cent. Some say they will have to pass on the cost to consumers.

“This self-employed group, who already pay their taxes in the UK, have become collateral damage in the struggle between Amazon and the Government,” Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed, told The Times.

Analysts estimate that Amazon takes a 30 per cent cut from each sale. This comprises its current 15 per cent referral fee on every sale through its platform, plus other costs including storage and delivery fees.

>See also: Third party platforms: is it worth selling through the likes of eBay and Amazon?

Amazon has nearly 300,000 registered sellers trading on its UK site, according to industry estimates.

It is thought that small businesses selling through the platform accounted for nearly half of all the £11bn Amazon earned in 2018.

Mike Cherry, national chairman of the Federation of Small Businesses, told the newspaper: “The tax is aimed at the profits of multinationals with large revenues. Passing the tax on to their small business customers will hurt them at the worst possible time.”

Further reading

Should my business start selling on Amazon?


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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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