At 2:30 p.m. local time on September 13th, the UK Parliament's Public Accounts Committee (PAC) held a hearing on VAT fraud on e-commerce platforms.
Those attending the meeting included officials from the UK's Her Majesty's Revenue and Customs (HMRC), Steve Dishman, Amazon's vice president of European tax, and Joe Billante, eBay's vice president and chief financial officer for Europe, the Middle East and Africa.
The PAC pointed out that in 2015-2016, e-commerce VAT fraud caused the UK government to lose between 1 billion and 1.5 billion pounds in tax revenue.
British MPs have condemned Amazon and eBay for turning a blind eye to tax evasion on their platforms.
In recent years, overseas sellers (especially Chinese sellers) have occupied a major position in many popular categories on eBay and Amazon. These sellers illegally sell products into the UK without paying VAT. Local sellers said they were very miserable and were forced to operate poorly by sellers without VAT.
At a meeting on September 13, Caroline Flint, a member of the British Labour Party Parliament, questioned Joe Billante of eBay and Steve Dishman of Amazon why they did not prevent tax fraud by sellers on their platforms.
Council leader Meg Hiller said both platforms were still collecting commissions from overseas defrauding taxpayers.
MPs also criticised HMRC tax officials for not doing enough to effectively enforce the rules. Tax expert Professor Rita de la Feria told the committee that HMRC's failures had allowed businesses to avoid paying the tax they owed.
HMRC permanent secretary Jon Thompson called for a change in the law to make companies such as Amazon bear some of the VAT.
Some MPs said they had shopped undercover and found some sellers were not including VAT in their prices at all.
Conservative MP Gillian Keegan said she bought lightbulbs from a company and when she asked for a VAT number the company did not respond. “It is easy to spot such sellers on the platform, so it is easy for the platform to find ways to prevent this kind of tax fraud from happening,” she said.
Amazon has previously been accused of not paying its fair share of tax in the UK. Despite having billions in sales in the UK last year, it paid just £7.4m in tax. One report shows that booksellers pay 11 times more in taxes than Amazon.
What is the attitude of Amazon and eBay?
eBay's attitude:
"We don't want such sellers on our platform. Once we find them, we will take immediate action." Billante said that most of the sellers currently selling on the UK site are local sellers.
Other non-UK sellers already have a team of 210 people working on tax evasion issues.
Currently, the platform receives an average of 77 investigation notices from HMRC per day and closes an average of 184 problematic accounts per day. Actively investigate 893 accounts every day.
According to statistics, action has been taken against 1,077 accounts in the past few years. The platform has been working to regulate the behavior of sellers and urge them to register for VAT.
Amazon's attitude:
He admitted that he took this issue seriously and said: "We want all sellers to compete fairly, and this is the problem we are focused on solving." He said that the platform has been working hard to improve this problem, and has provided training and education to sellers to ensure that they operate in compliance, and requires all sellers to register for VAT.
Although there are currently only a small number of overseas sellers on the platform, Amazon still takes this issue very seriously and hopes that the UK will continue to do so.
However, since most sellers on Amazon still want to operate in compliance, they currently lack understanding of this aspect. In addition, there are 120 million sellers on the platform exporting to the UK, and teaching them compliance is a huge project.
At the same time, the platform shares the seller’s information with HRMC, the data is transparent, and responses are given within 24 hours.
Who needs to declare VAT?
More than half of all e-commerce sales are pure-play e-commerce sales, particularly through platforms like Amazon and eBay. Some overseas sellers now choose to export goods to the UK, store them in logistics centers, and then sell the products to British consumers through online platforms.
UK tax law requires any seller outside the UK to pay VAT if the goods are already in the UK when they are sold. Amazon and eBay said the responsibility for reporting VAT on the sale of goods or services lies with the seller.
Amazon Seller Center can also declare European VAT
Amazon announced the official launch of the “VAT Services on Amazon” tax filing service.
Here is the registration link for the service: https://services.amazon.co.uk/services/vat-services-on-amazon.html
This tax filing service is a new service launched by Amazon in cooperation with global tax service provider Avalara. Avalara helps small businesses with VAT registration, tax reporting and filing in select European countries outside their own country. The new Amazon VAT service will help online marketplace sellers in the UK and EU to fulfill and manage their VAT obligations.
This service covers VAT reporting obligations in France, Germany, Italy, Poland, Spain, the Czech Republic and the United Kingdom. Currently, the tax declaration service has been integrated into Amazon Seller Center, supporting platform sellers selling on Amazon or other sales channels (if necessary) to conduct local VAT registration, as well as the approval and filing of relevant VAT documents.
The tax filing service now costs €400 per country per year, plus an additional €100 to help handle VAT filings for non-Amazon channels.
