Amazon are to introduce a stand-alone digital services tax fees as a separate line item on your Amazon invoice from the 1st of October 2024.
The UK Digital Services Tax is levied on the revenues of search engines, social media services and online marketplaces which derive value from UK users. It’s a response to businesses which are domiciled overseas and operate paying less that what is perceived as their fair share of tax based on their revenue generated from their UK operations. The Government described this as a misalignment between the place where profits are taxed and the place where value is created and other governments have agreed and introduced similar fees.
Speaking very bluntly, this is a fee that was introduced for large service providers, but Amazon don’t fancy paying it so are passing it on to you as the retailer. You face squeezed margins or have to pass the fee on to consumers and the impact the governments intended – taxing internet giants – is now a cost to you.
Amazon’s digital services fee is to cover the digital services taxes (DST) implemented by the governments of the UK, France, Italy, Spain and Canada. The typical DST rate is 2% in the UK and 3% in France, Italy, Spain and Canada.
There will be no change to your selling costs as since September 2020 when the fee was introduced Amazon increased selling fees in the UK by the 2% Digital Services Tax. What will now happen is Amazon will reduce your selling fees and FBA fees and account for digital services tax cost by introducing a stand-alone digital services fee.
DST charges are unpredictable as they vary based on the location of your business, the location of the buyer and other factors. Rather than base the stand-alone digital services fee on these location variables, which would create an unpredictable business impact because you can’t know the location of the customers who will buy your products, we’ll introduce a fixed digital services fee based only on your location and the store in which you sell.
– Amazon
Example digital services tax fees on Amazon
- If your business is established in the UK, and you sell a £15 item in the UK store, a 2% digital services fee will apply on your Selling on Amazon fees (£0.05 on £2.25) and FBA fees (£0.07 on £3.30) for sales starting on the 1st of October 2024.
- If your business is established in Italy, and you sell a £15 item in the UK store, a 3% digital services fee will apply on your Selling on Amazon fees (£0.07 on £2.25) for sales starting on the 1st of October 2024.
From the 1st of September, you’ll be able to preview the fee in Revenue Calculator, and from the 1st of October, you can track your digital services fees via Transaction View in Payments reports. If you use Pan-European FBA, the digital services fee will be accounted for in Amazon’s free Automate Pricing tool starting on the 1st of October.
