Amazon will pass on 2% digital tax to sellers

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

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.

Related Resource

Small & Medium Business Trends Report

Insights from 2,000+ business owners and leaders worldwide

Download now

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.

Featured Resources

The ultimate law enforcement agency guide to going mobile

Best practices for implementing a mobile device program

Free download

The business value of Red Hat OpenShift

Platform cost savings, ROI, and the challenges and opportunities of Red Hat OpenShift

Free download

Managing security and risk across the IT supply chain: A practical approach

Best practices for IT supply chain security

Free download

Digital remote monitoring and dispatch services’ impact on edge computing and data centres

Seven trends redefining remote monitoring and field service dispatch service requirements

Free download

Recommended

30 countries announce crackdown on ransomware payments
ransomware

30 countries announce crackdown on ransomware payments

15 Oct 2021
Senators seek to reform Section 230 protections
Policy & legislation

Senators seek to reform Section 230 protections

14 Oct 2021
Biden is confident in the nation’s cyber security efforts
cyber security

Biden is confident in the nation’s cyber security efforts

4 Oct 2021
Dual citizen sentenced to 11 years for role in North Korean crypto hacking scheme
hacking

Dual citizen sentenced to 11 years for role in North Korean crypto hacking scheme

10 Sep 2021

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
Windows 11 has problems with Oracle VirtualBox
Microsoft Windows

Windows 11 has problems with Oracle VirtualBox

5 Oct 2021