The UK government wants an international ‘Amazon Tax’ on online sales

By Dan Wilson August 10, 2018 - 3:09 pm

The Chancellor of the Exchequer, the finance minister for the UK, has indicated that the British government is in favour of an ‘Amazon tax’ and will seek international agreements to secure one to protect ‘traditional’ retail.

You can read his full interview on Sky here but here is one if the things that Hammond says:

We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online. That requires us to renegotiate international tax treaties because many of the big online businesses are international companies. If we can’t get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements.
– Philip Hammond, Chancellor of the Exchequer

Three things immediately jump out from these comments that are revealing. Firstly, is the semantic point that he considers the High Street and purely offline businesses as ‘traditional’ and specifically worthy of protection and preservation. Whilst many of us will be passionate about local High Street firms and local amenities, the threats to them aren’t just from online. Business rates, parking fees and rents are surely more problematic.

Secondly, he doesn’t seem to have a notion of ‘mixed’ companies that trade on and offline most successfully. Indeed, it seems to Tamebay that such ‘mixed’ retail companies should be encouraged because ecommerce sales can insulate a High Street business. Exhibit A: House of Fraser.

And thirdly, perhaps most crucially, he clearly and predominantly considers online retail businesses to be big concerns and multi-nationals rather than small businesses based in Britain. In this move, he is clearly attempting to tap into the protectionist rhetoric that has proved to be persuasive in Australia, where a GST (goods and service tax) is now applied to all goods bought from overseas.

As is also well known these days, more than a half of goods on Amazon are sold by third party (3P) sellers rather than Amazon itself. But an attack on Amazon is also something of an easy shot for headlines in August. And, as Hammond does indicate, the chances of getting an international deal could be time-consuming so merchants shouldn’t be alarmed just yet.

But a unilateral UK tax, that Hammond hits about, could be a threat to British small businesses who sell online. The devil is always the detail and this doesn’t seem to be a substantial proposal just yet by any measure. But even the sniff of the idea is disquieting: would it on all online sales, imports only or specifically against multi-nationals?

It’s hard to imagine that any Tamebay readers would welcome an ‘Amazon tax’ on British online sales. Or maybe you can appreciate the logic? What’s your reaction to Hammond’s suggestion?

  • 8 months ago

    Amazon should be made to pay much much higher tax in the UK. I hope the new leislation gets pushed through. Next it will be the likes of Google, Netfilx etc

  • John Hynde
    8 months ago

    With all due respect, Amazon should be made to pay much more tax regardless of the High Street and should pay back all the VAT not charged over the years by 3rd party sellers with interest and fines like everybody else would have. This is not about High Street preservation but about 1 company getting away with paying close to nothing while every small business has to pay up. And that includes British based online sellers which do charge VAT and do pay a normal rate of Corp. Tax as opposed to Amazon.

  • 8 months ago

    This proposal comes from a third-rate chancellor, in a fourth-rate government, led by a fifth-rate prime minister.

    Remember the proposed hike in NI for the self employed? That was gunned down by Tory backbenchers last time around.

    This government stumbles from week to week, putting out statements about nearly everything, but doing almost nothing. And the little they do achieve is bad for Britain.

    It has the same reek of death about it that hung around the fag end of John Major’s government in the 1990s.

    Perhaps Hammond’s words would carry more weight if they actually had a majority in parliament. The only way this crap would get through is if Northern Ireland was exempted from it.

    Maybe Hammond will bring back the window tax as well, update it and call it the Windows Tax.

  • northumbrian
    8 months ago

    dont matter what flavour of government is in power
    an online sales tax is coming ,its as certain as night follows day

    • 8 months ago

      was income tax excused as temporary too?

      around about the time of the napolEUnic wars?

  • Lion books
    8 months ago

    Whilst I totaĺy agree Amazon should pay all their taxes. If a new tax comes in I don’t want it becoming my tax or my customers with Amazon passing it on.

    If we are paying Amazon 15% plus rent and then 20% on my earnings, plus 7% national insurance. All we need is another 5 or 10% and we might as well pack up and go home.

  • 8 months ago

    As northumbrian said, it certainly looks like it is coming regardless of who is in Government.

    A 1% tax for online sales could raise £1m a week

    There is a certain logic to the idea, if the money is ring fenced and used for the good of the high street. Unfortunately it is more likely to disappear into the treasury accounts and only a small percentage will actually be distributed to local councils to reduce high street rates.

    It would not be a tax on the market place, they already pay tax, but on the goods sold by each individual buyer, possibly collected by the marketplace.

    The questions raised would be:

    Would it include 2nd hand goods
    Would it include private sales
    Would it include sales to outside the UK

  • Northumbrian
    8 months ago

    High st has been in decline for years
    On line is just the final nail
    Out of town retail parks /superstores were the main start of the rot
    No one suggested a tax on those,
    Loss of revenue and pot of dosh too good to miss ,will be the reason for any online tax
    not a love of the high st

  • Mac
    8 months ago

    Yes charge amazon higher tax. They in turn will charge sellers higher fees.
    And sellers will charge their customers higher prices.
    Everyone will be happy yes?

    Amazon appear to be paying all the tax they are legally required to do, same as any of us do. Sure they have a few things they can do that small companies cannot – staff shares for example that affect tax paid as per the latest amazon UK accounts.

    A cost of doing business goes up the company can pass the change in cost on to staff (pay rises), shareholders (dividends) or customers. That’s us folks.
    Same way that we can all do, someone somewhere has to pay the increased cost.

  • 8 months ago

    an online tax is simple really, set a rate then collect it much like vat or duty on fuel or alcohol
    the problem for the excise would be sellers using international .com sites to avoid UK duty

  • Michael
    8 months ago

    I’m in favour. Not good news for my business, but I could survive it.

  • 8 months ago

    An online tax is simply a knee jerk reaction, as Northumbrian said above, No one suggested a tax on Out of town retail parks /superstores, nor did local councils do anything to reduce the effect on the high street stores, rates continued to rise.

    I was recently in town and purchased an item, I could have saved £2 (10%) by buying on-line but as I was in the store I did buy it there. Most of my shopping is done on-line and I don’t see how that will change. So an on-line tax will just be another tax and the chances are that the high street will continue to decline.

    I do think that smaller independent shops would benefit from a reduction in rates and any tax should be used to encourage smaller independents back to the high street.

  • David Page
    8 months ago

    I am definitely in favour of Amazon paying more tax, it is currently an unfair playing field. We can’t just continue to allow money flowing out of the system to the top %. Yes everything Amazon is currently doing is legal but lets change that. All for successful companies and individuals making money so long as they also contribute a fair share of taxes at the same time.

    • 8 months ago

      @David Page – This is not about Amazon paying more tax, it will be a tax on the businesses that sell on-line. Market places like Amazon will just be the collector of such taxes.

      Amazon will always pay as little tax as they can get away with.

  • PAUL S
    8 months ago

    Amazon already generate huge tax revenues for the UK government. They employee thousands of people who pay tax and NI, those employees also spend their wages in the UK and boost the economy. There are many third party sellers like me who buy from uk wholesalers, employee people, pay corporation tax, NI, and VAT. the spin-off from amazon is huge, it generates billions to the UK economy.

    Online tax? Be careful what you wish for, they can’t just tax amazon, they will tax everyone, including ebay, you and and me and ultimately our customers will pay. I’ve had a high street shop, the enemy is high rents, high business rates, and boring retail chains who have perpetuated the high rents and kept out innovative new businesses.

    • james
      7 months ago

      aren’t a large percentage of amazon workers so low-paid that they’re on tax credits?
      having their wages subsidised at the taxpayers expense, rather than contributing?

  • 8 months ago

    There’s already an online sales tax. It’s called VAT. The issues the High Street faces are complex and won’t be solved by a tax which is passed to councils to install more hanging baskets.

    The real solution is for the IFRS and other accounting bodies to work with governments to update the international accounting standards to reflect the modern world of multinational mega-corporations.

    At a simple level, for any multinational company, revenues generated should have all internal and related-party transactions stripped out (no more paying billions to a shell company in Luxembourg for “logo usage rights”). Then those revenues should be apportioned to the countries where revenues were actually generated so they can be taxed there.

    There would also need to be truly independent international auditors, with strict separation rules so they don’t do a KPMG and have one division auditing a company where another division is doing the accounts.

    Now admittedly this is simplified, but it would be fair and transparent and mean that companies would pay tax based on where their revenues come from and couldn’t offshore profits to the lowest tax jurisdiction they can find. Sadly, it requires a degree of international co-operation that is probably lacking in today’s world.

  • David Fear
    8 months ago

    @alonicus is right: “There’s already an online sales tax. It’s called VAT. ”

    and is also right about:
    “At a simple level, for any multinational company, revenues generated should have all internal and related-party transactions stripped out (no more paying billions to a shell company in Luxembourg for “logo usage rights”). Then those revenues should be apportioned to the countries where revenues were actually generated so they can be taxed there.”

    As other people have said, you wouldn’t just get an Amazon tax you would get an online sales tax which would apply to ALL online sales, not just Amazon.

    So what would happen to VAT if you sold online? replace it with the NEW online sales tax? add another tax to online sales?

  • David Fear
    8 months ago

    @alonicus is right: “There’s already an online sales tax. It’s called VAT. ”

    and is also right about:
    “At a simple level, for any multinational company, revenues generated should have all internal and related-party transactions stripped out (no more paying billions to a shell company in Luxembourg for “logo usage rights”). Then those revenues should be apportioned to the countries where revenues were actually generated so they can be taxed there.”

    As other people have said, you wouldn’t just get an Amazon tax you would get an online sales tax which would apply to ALL online sales, not just Amazon.

    So what would happen to VAT if you sold online? replace it with the NEW online sales tax? add another tax to online sales?

  • SAM
    8 months ago

    I would tax Amazon (themselves) properly and make them pay and back tax along with their other tax dodging pals at ebay, Google etc. They bring nothing to wider society.
    Simple really close the tax loopholes, and if Amazon are not happy kick them out. What are you losing thousands of zero hours contracts, these jobs could be replaced very quick if all business was on a level playing field. The jobs Amazon COST are far for costly than anything they create…net negative for society in the long term.

    What they declared was a slap in the face to every person and business in this country last week. It was actually disgusting.

    Tax seems to be the answer to everything. Hammond will be gone soon along with the Tories, so we are really going to get some “whacky tax proposals” in the pipeline from Labour :(, dread what that lunatic McDonnell comes up with…

    Get rid of VAT and just have a sales tax, all business wants is a level playing field.

  • 8 months ago

    @ alonicus / David Fear & Bernard McNamee

    “There’s already an online sales tax. It’s called VAT. ”

    Do you guys live on a different planet to the rest of us. When I go out for a beer, have a meal out, buy things in the shop I pay VAT on them. Have I been conned? I was buying in person not online, why do they charge me VAT if it is an online tax??

    VAT is NOT an online sales tax, that has not be implemented yet. When it is, VAT will still be charged and have to be paid.

    They could introduce a higher rate of VAT for online sales, but that would not take into consideration sellers who are not VAT rated.

    As the idea is that the money should be used to help high street stores then the money should be collected as a separate tax and ideally it would be ring-fenced so only used for that purpose.

  • Daniel
    8 months ago

    Reducing taxes for high street retailers would be better in my opinion but we’d need a conservative government for that to happen.

    • 7 months ago

      Why do you need a Tory government for that to happen that could be the policy of any political party???

      Do you also need a Tory governemnt to manage Brixit, or do you just need a bunch idoits stumbling about from one crisis to next, with no idea of the real world from Private school to manage that???

  • james
    7 months ago

    funny how every government solution involves giving the government more money.
    can anyone here picture them reducing the high street tax? the notion is ridiculous.
    but hey, find a way for the man in the street to pass even more money to the government, yup, that’s definitely gonna happen.
    amazon won’t suffer directly, they up prices, it’s the consumers who end up paying more, the government that rakes in more, and then use it for duck-ponds for their third homes. or voting themselves another massive pay rise while freezing wages for public sector workers and cutting police numbers.
    okay descended into a bit of a rant, but you get my point. it’s ALWAYS a tax, and always an increase in tax, why don’t they find a solution for something just once that doesn’t result in me personally getting poorer?

  • 7 months ago

    Clueless… I pay commission and post which is not paid by your high street retailer.

    Tax fair, tax profit…It is irrelevant where I generate the profit.

    If you want Amazon to pay more tax change the law. Simple.

    Amazon may not pay as much as most would like but it is worth oting that they employ 10’s of thoudsands and contribute to the economy as a whole.

    • james
      7 months ago

      Again, i’m sure most amazon staff are low-paid and on tax credits, so not actually contributing to the economy in that regard, staff are subsidised at the taxpayers expense while the company generates millions in revenue.
      and for every amazon job, there’s ten people being put out of a job elsewhere, who were probably on better pay and conditions.
      sure it’s inefficient having 10 people do the job which one could do, it’s killing the inefficiencies which is what makes amazon so powerful, but this comes at a cost, to the economy as a whole, and to the people who work there.
      i don’t consider amazon to contribute through the jobs they “create”, the jobs aren’t created they’re just moved around, and “streamlined” and made inferior.

    • Dave
      7 months ago

      @ james. Here’s some payment data:

      Looks like a lot more than the £73 they’d get if they were unemployed instead of working for Amazon. They’ve gotta spend those wages somewhere, and that benefits all of us. We’re at a record low unemployment, so I doubt that each Amazon worker has made 10 others unemployed.

      About 7 million people in the UK are entitled to tax credits. It’s how the welfare system works.

      We need to accept that times have changed. The High Street HAS to change also. As someone else said, why would I waste an hour of my day popping down to the shops when I can buy it in seconds on my phone. I’d still do that if it cost a few quid more online – its easier/faster!

      Maybe we should start taxing mobile phone data usage. After all, thats what people use to buy their things these days 😉

    • james
      7 months ago

      we’re at record low unemplyment becuase a couple of the gov changed the rules as to what constitues employment.

      on a zero-hours contract and haven’t worked in 3 weeks? you’re in full employment.
      on a part-time wage? that’s full employment now.
      still on benefits but get more than £5 per week from a paper round? yup, you’re in full employment under the new rules.
      don’t have any job, but aren’t looking hard enough for one? you’re in full employment.
      if you sack every full-time worker, and replace each with 3 part time workers, there’s 3 times more employment? no, not really.
      this article from last year explains it a bit better than I:

      it helps your figures when you can completely change what those figures are.
      I’d hold the world record for the 100m sprint if i only needed to run 10m, but still compared like-for-like to everyone who ran the full 100m before me.

  • 7 months ago

    At the end of the day, I don’t clear if an Amazon tax is introduced or not to all online sales, as long as it applied to all sellers, if everyone is hit with 2% extra sales tax on online then it will make no difference and everyone will factor that into there prices eventually. It’s just when some sellers e.g. not VAT registered (such a Chinesse large scale sellers), don’t pay their way it will hurt UK sellers. As long as it collected at source, so e.g. Amazon fee’s went from 15% to 17%. then it would be equal to all. If anyone really truely beleaved that such a tax would make the high street (successful again, which it won’t), then you can alway relocate your business to there, no one is making you be either an online retailer or bricks and morter retailer, you have a choice.

  • Jon
    7 months ago

    Why should pay online tax already I have so many expenses vat,corp tax, Amazon fees,nice,corp tax, refunds,postage . What am I left with ?

    I might as well close down and get on the benefits system.

    The you got Chinese ppl send stuff into FBA avoid any of those overheads and not contributing to the UK . Most avoid VAT it’s fact

    When this happens I’m firing my staff and getting on the benefits gravy train why should I work 50-70 hours a week for 30,000 profit which is peanuts when I have to turnover over 700,00 to get.

    • james
      7 months ago

      try actually living on £73 a week for any length of time, then come back and tell me you’re on the “gravy train”. i’m sure the gravy stains and holes in your clothes will testify to that.

  • 7 months ago

    My wife wanted to buy an item from Claire’s, a company that is struggling and recently filed for Chapter 11 bankruptcy in the US.

    They had an on-line sale and my wife went into the local shop to buy it they told her she would have to pay full price.

    She came home and ordered it on-line and opted for click & Collect from the local shop, the same shop that would not honour the sale price.

    Maybe because it is a franchise but some businesses need to get on board with sorting out this internal problem. As another time the lost customer may choose to buy from another company.

    On the same day at Debenhams, they did not have the size she wanted, from their online sale, in stock but ordered it in for her to collect at the sale price.

    • james
      7 months ago

      used to have this problem a lot when i worked at comet, who went bust.
      customer’s would come in, use an hour of my “expert” time, break the knobs off buttons, enjoy all the benefits of the showroom, then tell us it’s £30 cheaper online, manager never let you match the online price, so nobody bought in store.
      we could all see the direction that was going.

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