Ebay shames Amazon over plan to pass cost of new tech tax onto small firms hitting them 'at worst possible time'

By MATT OLIVER FOR THE DAILY MAIL

Updated:

Amazon is under pressure to reverse its decision to pass on the cost of a new tech tax to small businesses.

The internet shopping giant, which raked in sales of £750million per day in the second quarter, told firms selling goods on its marketplace that it will hike fees in response to the UK digital services tax.

Its move was condemned by the Federation of Small Businesses (FSB), which said it would hit companies 'at the worst possible time' as they reel from the pandemic.

Penny-pinching: Amazon, which raked in sales of £750m per day in the second quarter, told firms selling on its marketplace that it will hike fees in response to the UK digital services tax

Penny-pinching: Amazon, which raked in sales of £750m per day in the second quarter, told firms selling on its marketplace that it will hike fees in response to the UK digital services tax

And its position is under further pressure after rival Ebay said it would absorb the cost of the tax rather than pass it on to sellers on its platform.

Ebay told businesses: 'A lot of you have asked whether we at Ebay will be passing on this tax. We wanted to reassure you that we won't do that.'

The digital services tax was introduced in the UK from April 1 and is aimed at getting multinational firms to pay a fairer amount of tax on activities here. 

It levies 2 per cent of UK online sales, with the Treasury predicting it to bring in around £500million annually by 2025.

Amazon tried to warn the Government off but failed. Because of this, it has told small firms they face higher referral, delivery and storage fees from September 1.

Its move has been heavily criticised, with Labour House of Commons Business Committee chairman Darren Jones accusing it of seeking to 'opt out of fair taxes'. 

Anneliese Dodds, Labour's Shadow Chancellor, said: 'Amazon should not be passing on the cost to its customers. It's good to see Ebay say they won't pass this tax on.'

Amazon declined to comment on Ebay's decision. It said: 'We have encouraged the Government to pursue a global agreement on the taxation of the digital economy at [international] level rather than unilateral taxes, so that rules would be consistent across countries and clearer and fairer.'

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos

Comments 38

Share what you think

  View all

The comments below have not been moderated.

  View all

The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

We are no longer accepting comments on this article.