Unlike arch-rival Amazon, eBay has assured the 300,000 third parties that use its online marketplaces it will continue to absorb the UK government’s Digital Services Tax (DST) rather than pass it on.
From April, large multi-nationals that generate revenue via social media platforms, a search engine or a web souk were ordered to pay a 2 per cent tax on turnover in Britain. Last week, Amazon said it could no longer afford to pay that tax on behalf of the sellers that use its sales arena.
eBay, however, is clearly trying to exploit that to win favour and who could blame them: “eBay is one of the marketplaces which will have to pay the new tax - and a lot of you have asked whether we at eBay will be passing on this tax to our sellers in the form of new fees.
“We wanted to reassure you that we won’t do that, so you will not be charged additional new fees as a result of this tax,” eBay confirmed.
The introduction of the tax - which only kicks in after a business generates £25m in the UK via consumer sales - was because the British tax collector, HM Revenues & Customs, felt it was being cheated out of tax owed by companies including Amazon, Google and Facebook. This measure is a stop gap after talks for a global digital tax by the OECD stalled when the US said it was walking away from the negotiating table.
“The government still believes the most sustainable long-term solution to the tax changes arising from digitalisation is reform of the International corporate tax rules and strongly support G7, G20 and OECD discussions on the different proposals for reform,” UK.Gov said in April.
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“The government is committed to dis-applying the Digital Services Tax once an appropriate international solution is in place,” it added.
Amazon, whose reputation for, er, tax efficiency precedes it, said last week that as DST was being passed in the UK, and while talks over it with the British government were ongoing, it kindly “absorbed the increase” in tax but the business, founded and run by the richest man in the world, Jeff Bezos, could simply no longer afford to do so.
“Now that the legislation has passed, we want to inform you that we will be increasing Referral fees, Fulfilment by Amazon (FBA) fees, monthly FBA storage fees and Multichannel Fulfilment fees by 2% in the UK to reflect this additional cost,” Amazon told its sellers.
Those fees would not be charged retrospectively and will kick in from 1st September, the e-commerce titan confirmed.
The European Commission is currently investigating whether Amazon breaches EU competition rules by exploiting “sensitive” data gained from third party sellers that use its platform. Globally, 58 per cent of Amazon Retail’s shipments come from third party sellers.
Margrethe Vestager, the EU commish who oversees competition policy, said she was intending to take a “very close look at Amazon’s business practices and its dual role as marketplace and retailer, to asses its compliance with EU competition tasks.”
Amazon agreed to overhaul its Ts&Cs last year for third party sellers on its marketplace in Germany to address complaints that they were treated unfairly. The ruling was expected to have a profound impact on Amazon’s marketplace globally.
The amendments tackled compliance including "unilateral exclusion of liability to Amazon's benefit, the termination and blocking of sellers' accounts" and the "handling of product information and many other issues". ®