UK Amazon Publishers Face 20% Tax Hike

Categories: Uncategorized

To quote a line in Raising Arizona, “The government do take a bite, don’t she?”

The Amazon tax war has been a hot-button issue  in the US for years now, as states seek new revenue streams to chip away at their massive deficits.

Well, the same sort of scenario is playing out across the pond. Only this time, Amazon is using tax laws to stick it to ebook publishers, according to the Guardian.

Allegedly, Amazon Europe is trying to stick publishers with the UK’s 20% value added tax, even though Amazon only has to pay 3% — because its headquarters are located in a lovely little tax haven named Luxembourg.

In case you’re bad at math, that means Amazon may be trying to strong arm publishers out of 17% of ebook sales based on a tax that they don’t truly have to pay. Tisk tisk, I say…

To add another tricky layer to this mess, Amazon is a virtual monopoly when it comes to UK ebook sales. According to estimates,  Amazon sells 9 out of 10 ebooks in the British Isles.

To be fair, I should point out that the Guardian claims to have a publishing contract that they cite as evidence.

In the US, Amazon is well known for being very fair with its publishers, generous even… maybe Amazon Europe is completely different?

Either way, 17% is a big freaking deal — whether or not these allegations are true. That’s nearly double the amount that US states are raising absolute cain about.

Publishing deals in the EU are quite different from those in the US and, unsurprisingly, there’s a lot of bureaucracy to navigate. If these allegations are accurate — Amazon seems to be playing that fact to  its maximum advantage. Scandalous.

UK ePub experts: Please weigh in! Can you confirm that Amazon is possibly benefiting from a dodgy tax scheme?

About Josh Loposer

Josh is the managing editor of Digital Marketer, as well an aspiring novelist. Find out more about what Josh is working on on Facebook, Google, or on his website.
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  • Matt says:

    I’m sorry but as per most Americans you have no idea how VAT works. Amazon DOES NOT GET TO KEEP IT. Amazon collects the VAT from customers and publishers then each quarter the VAT Amazon has paid on purchases is OFFSET against what it collects.

    So it’s a net zero system with the UK government ending up with the 20%, not Amazon. So it’s irrelevant what Amazons own corporation tax rate is.

    Whether VAT is charged is not only based on where a company resides but the ultimate destination of the goods sold. For example, if I pay a UK based courier to send a package to the USA I pay NO VAT yet if I ship a package to France I pay the 20%. This is bonkers as I’m paying a UK company for a UK service, it shouldn’t matter where the product is shipped to :(

  • Cliff Bradshaw says:

    This is another scandal involving large corporations and governments. If you publish in paper there is no vat. Publish digitally anit it classed as software so it is taxed. We need to lobby government or get a news campaighn going.

  • Ray says:

    Would not surprise me, VAT (value added tax) is the biggest scam ever, educational products are supposed to be exempt of VAT, try purchasing a “How To” ebook from Clickbank,” How To” surely equates to learning, we, in the UK get hit with an extra 20% cost

  • Michael O'Grady says:

    Hi Ryan
    I’ve little experience of publishing but the following points should be considered.
    1. In this article you state that Amazon has 90% of UK market but a few weeks ago your article on Tesco buying Mobcast now makes Tesco the largest ePublisher in the UK (above Amazon and B&N). So some issues on UK market distribution need concluding.
    2. The UK media and Government is starting to kick up a storm about foreign companies making (assumed) huge profits from UK operations whilst paying token or no tax here. Starbucks are big in the news right now and some digital giants are being mentioned, among them> Amazon and Ebay. Perhaps Amazon is working on paying the UK Government the 20% it hopes to get from publishers so as not to pay operational tax on profits. If it’s to do with money and international accountancy ….then anything is possible!
    Nice blog – I’ve started reading with great interest. Keep it up.
    Michael :-)

    • Josh Loposer says:

      Thanks for the comment. I should probably clarify what I meant. Tesco is the largest bookseller (or one of the largest, at least) in the UK — in terms of physical books. Amazon is dominant in ebooks and ePub in the US and UK. Tesco’s purchase of Mobcast is a big deal, bc it signals how serious they are about becoming an ePub giant.