UK: Digital tax ‘will hit struggling small firms — not Amazon’.

As published on standard.co.uk, Wednesday 14 October, 2020.

The Government was today urged to scrap its new digital services tax “and start again” after it emerged that Amazon will not be directly affected, with the burden passed on to struggling small businesses.

Ministers claimed that the two per cent levy, announced in April, would make “global giants with profitable businesses in the UK pay their fair share towards supporting our public sector”.

However, HMRC has admitted that the way the tax has been set up means Amazon would only pay the charge on revenue it receives from third-party sellers who use its platform, according to The Times.

It has already said it will recoup this by charging higher fees to sellers, many of which are small retailers already suffering from the impact of the pandemic.

The Silicon Valley giant last year paid £293 million in UK tax on sales of £13.73 billion.

Mike Cherry, national chairman of the Federation of Small Businesses, said: “Moves like this are not in the spirit of the digital services tax. ­Amazon should reconsider its decision to effectively duck paying it by introducing additional charges for small businesses.”

Labour MP Margaret Hodge, who chairs the Tax In Parliament group, said in a tweet: “Absolutely appalling that Amazon is not only passing the digital services tax levy on to small businesses, it’s totally exempt from the tax on products it sells directly. We urgently need new & innovative ways of taxing the Big Tech companies. But @hmtreasury has bungled this one.”

Tax expert Richard Murphy, of ­Sheffield University Management School, told LBC: “The UK got the design of the tax wrong and needs to start again.”

A spokesman 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.”