Government slammed for allowing Amazon to exploit “glaring loophole” in digital services tax

The UK government has been called on the fix a “glaring loophole” in its ‘Amazon Tax’ which has allowed the retailer to effectively avoid paying the levy.

Labour MP and tax campaigner Dame Margaret Hodge has slammed the treasury for allowing Amazon and other tech giants like Google to exploit a loophole in its new digital services tax (DST), The Telegraph reported.

“Our high streets and smaller businesses are desperately struggling” she said.

“That’s why it’s so galling that Amazon doesn’t pay its fair share and avoids the new digital services tax”.

“Amazon is taking advantage of a glaring loophole in the tax. (It) passes the levy onto smaller businesses and escapes any charges for the products it sells itself. The DST is a terribly designed tax and raises little cash, but it’s necessary until there is international agreement on corporate tax reform.

“Until then, the Government needs to step up and sort out the digital services tax so that Amazon and others can’t shirk their responsibilities.”

READ MORE: Digital Services Tax allowing Amazon “to avoid tax on its own sales” as business groups slam Sunak

This tax was launched in April to ensure search engines, social media services and online marketplaces which derive value from UK users pay their fair share of taxes, adding a two per cent levy on all revenues with hopes of raising £500 million a year.

In August Amazon revealed that it would simply pass this two per cent tax along to sellers who use its third-party marketplace, effectively meaning it would not pay a penny on its own sales.

In response, an Amazon spokesman 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.

“We continue to actively support and contribute to the OECD’s work to achieve a consensus-based solution.”

The Treasury added: “The Digital Services Tax is a proportionate measure that ensures tech firms pay their share of tax in the UK. We have been clear it is a temporary tax.”

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