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Amazon will pass on 2% digital tax to sellers

Amazon says small businesses are likely to bear the brunt of any proposed tax

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Amazon has downplayed concerns around a potential 2% tax on tech companies in the UK, but warned that additional charges may need to be pushed on to sellers and that small businesses would be hurt in the process.

The government announced the plans for a digital services tax last year, amid wider EU and OECD plans to tackle the issue of tax avoidance of online companies, some of which use complicated but legal corporate structures to cut their tax bills.

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UK sales via Amazon, worth £10 billion annually, are booked through Luxembourg, but even its local warehousing and distribution division, Amazon UK Services, managed to pay just £14 million in corporation tax last year — it's reportedly paid just £61 million in corporation in the past two decades in the UK, less than Marks & Spencer paid in one year alone. That setup is entirely legal under UK law.

Speaking to the Financial Times, Amazon UK country manager Doug Gurr said the company was "happy" to pay its tax bill, but that a digital services tax, set to be introduced in March, would be paid for by boosting fees to sellers, which is what Amazon did in France when that country introduced its own 3% tax.

He warned that could have a negative impact on the small businesses that use the Amazon platform as their marketplace. “If you are not careful in the design, these taxes can actually directly hit all of the small businesses that use our services,” Gurr told the FT. “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 Amazon's last quarter, it made $70 billion in revenue and $2 billion in profit. Amazon's CEO Jeff Bezos was a net worth of more than $100 billion.

Amazon is set to open its first UK corporate office outside London in Manchester, which will employ 600 people. Amazon employs nearly 30,000 people across the country.

The spectre of a digital services tax sparked a threat of retaliation from the US, where most such companies are headquartered, with US President Donald Trump threatening import taxes as high as 100% on French products such as cheese and champagne after that country introduced its tax. Local tech companies have said they're worried the tax will hurt digital businesses.

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