Amazon looks set to dodge UK Digital Services Tax

But smaller firms using the tech giant's marketplace look set to face a 2% increase in charges

An upside down amazon box

Amazon will not be affected by the incoming Digital Services Tax but smaller traders that use its online marketplace will face increased charges.

The Times reports that HMRC has admitted that third-party sellers will face a 2% rise in the amount they pay, while Amazon will effectively gain a price advantage on competing goods it sells directly to consumers. 

The UK's chancellor, Rishi Sunak, signed a letter in June, alongside counterparts from France, Spain and Italy, declaring that tech giants such as Amazon and Google needed to 'pay their fair share of tax'.

However, just seven months after the Digital Services Tax was first introduced, it's claimed that HMRC has admitted that Amazon won't be affected by 2% levy. 

Amazon reportedly paid just £14.4 million in corporation tax on £13.7 billion of total UK revenues last year. The proposed tax is supposed to curtail this by placing a levy on the service fees that companies such as Amazon and Google charge third parties.

Lord Leigh of Hurley said that it was "clear" the government was not going to tax Amazon properly, adding that it was allowing the tech giant to avoid tax on its own marketplace sales. 

"This puts regular retailers at a significant disadvantage," he told the House of Lords. "The digital sales tax does not achieve its objective of yielding more revenue from the likes of Amazon, as it is simply passed on to its suppliers in the marketplace, which have to absorb this tax in their margin."

In September, Google used a similar method to swerve tax on advertising by announcing an additional charge for ads served on its search engine and YouTube. The fees come into effect in November and will consume the extra 2% UK tax the company has to pay.

Google reported revenues of £1.6 billion last year, but only paid £44 million in corporation tax in the UK. 

"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," an Amazon spokesperson said. 

Featured Resources

Next-generation time series: Forecasting for the real world, not the ideal world

Solve time series problems with AI

Free download

The future of productivity

Driving your business forward with Microsoft Office 365

Free download

How to plan for endpoint security against ever-evolving cyber threats

Safeguard your devices, data, and reputation

Free download

A quantitative comparison of UPS monitoring and servicing approaches across edge environments

Effective UPS fleet management

Free download

Most Popular

Best Linux distros 2021
operating systems

Best Linux distros 2021

11 Oct 2021
Apple MacBook Pro 15in vs Dell XPS 15: Clash of the titans
Laptops

Apple MacBook Pro 15in vs Dell XPS 15: Clash of the titans

11 Oct 2021
PayPal dismisses $45 billion Pinterest takeover as "market rumour"
Acquisition

PayPal dismisses $45 billion Pinterest takeover as "market rumour"

25 Oct 2021