Amazon and Ebay will soon be forced to pay VAT on overseas sales in major tax fraud crackdown

Online marketplaces in the UK will soon be forced to collect Value Added Tax (VAT) on all sales made in the country by overseas sellers in a major crackdown on tax fraud.

VAT fraud by international sellers on platforms like Amazon and Ebay are understood to cost the UK taxpayer £1.5 billion a year and a failure to combat it has been attributed to the decline of the high street in recent years.

Currently websites like Amazon and Ebay are considered facilitators of overseas sales made online in the UK.

According to leaked HMRC documents seen by the Financial Times, the government plans to end this status from January, instead considering them vendors and requiring them by law to hand VAT on all sales made in the UK to the government.

READ MORE: UK to push ahead with ‘Amazon tax’ despite threats of trade war with US

“Following the end of the (Brexit) transition period, the UK will need to introduce a UK-wide model to ensure UK businesses are not disadvantaged by competition from VAT-free imports,” the leaked document read.

Head of campaign group Retailers Against VAT Abuse Schemes Richard Allen told the Financial Times: “Common sense dictates it is far easier to police these facilitators than it is to police hundreds of thousands of sellers many of whom are merely temporary shells for organised tax evaders,” he said.

High street retailers have long been calling for such measures to level the playing field, criticising online marketplaces unfair advantage of largely being able to sidestep paying VAT thus offering cheaper items.

The document stated that the policy was not up for consultation suggesting that the measures are likely to be implemented next year.

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3 Comments. Leave new

  • Avatar
    Jeremy Collingwood
    June 1, 2020 12:10 pm

    Amazon et al have moved from their ‘we are just platform’ nonsense and now are buying up the parts of the delivery chain – like logistic and house entry (Ring door bell) companies. They are MAJOR players in the retail market & should pay all the taxes that other Retailers / Logistic companies pay.
    They have had a extraordinary Tax ride, move profits abroad, treat their staff like it’s Victorian England (well the UK is polluted, drink & gambling addition are rife, the sewers are over-flowing..)

    Reply
    • Avatar
      Peter LEWIS
      June 1, 2020 3:30 pm

      Amazon itself will not pay an extra penny of tax following such a move, although UK consumers will. This change is designed to ensure that overseas sellers (think Hong Kong & so on) don’t get away without VAT being charged & hence undercut UK retailers. Yes, Amazon and other digital giants like Google exploit accounting laws that let them transfer profits to low-tax environments such as Luxembourg & Ireland & we let them get away with it.

      The OECD is trying to limit this but it will take a long time with many battles against the entrenched interests, not least of the US administration. This is why it’s only reasonable that such outfits pay a ‘turnover tax’ of some sort for the privilege of doing business. The country has to provide the health cover, the education, the roads and so on without which such outfits would have no business, so they should not begrudge paying towards these costs. (Nevertheless, their shareholders will scream but will have to put up with it if it’s the law in the country where they want to trade.)

      Reply
  • If this happens, is the end of overseas sellers. And let’s hope it happens soon. UK Sellers can easily match and beat the foreign sellers, if the UK market place becomes a “level playing field”. So far Amazon and eBay have not contributed in the UK economy, but they have exploiting it “nicely”

    Reply

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