Amazon to escape UK digital services tax that will hit small traders

Amazon will not have to pay the UK’s new digital services tax on products it sells directly to consumers, while small businesses which sell products on its site will face increased charges.

The tax - which aims to get tech Silicon Valley firms to pay their way in the UK - is forecast to eventually bring in about £500 million a year.

Amazon has already stated that the two per cent levy on revenues made here will be passed on to sellers, but it will not be increasing the cost of advertising on its platform.

A new report in the Times revealed that the e-commerce giant, which only paid £14.4 million of corporation tax on total UK revenues of £13.7 billion last year, will not have to pay the tax on goods it sells directly.

The digital services tax is not being levied on sales, but on the service fees that companies such as Amazon and Google charge third parties.

Last month, Google told thousands of advertising clients in the UK that from November it will charge an additional fee for adverts served on Google and YouTube to cover the new tax.

In June, European countries said they would go ahead with a digital tax, despite the US pulling out of negotiations with the OECD to implement an internationally agreed tax treaty.

A spokesperson for Amazon said: “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.”

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