***DISCLAIMER***
The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
***END DISCLAIMER***
This article is for businesses who are established in the UK who are selling in the Amazon North American, Australian or Japanese regions.
For the UK and European Amazon region see this article.
Contents
Which tax rates apply to sales
As a UK business selling in any Amazon region apart from the UK & European region the tax rate applied to sales depends on if you are fulfilling the goods yourself from inventory held in the UK (MFN) or if you are using fulfilment by Amazon (FBA).
If you hold inventory in the UK and ship products to customers outside the UK then usually the Zero Rated Income tax rate applies. This is because HMRC want to know about the income in box 6 of your VAT return but there is no VAT to pay on them since they were exports.
If you use FBA and Amazon fulfils orders to customers outside the UK from inventory held outside GB then usually the tax rate No VAT applies. This is because these sales are not just exports but they are shipped form outside GB too and therefore outside the scope of UK VAT.
Which tax rates apply to fees
As a UK business selling in any amazon region apart from the UK & European region the tax rate applied to fees depends on a few things:
Is the fee for a physical service carried out outside the UK & EU, or for a digital service provided over the internet.
Have you provided Amazon with your GB VAT number.
Is the fee for a physical service carried out outside the UK & EU, or for a digital service provided over the internet.
Amazon seller fees and advertising costs are digital services provided over the internet, where as FBA fees and storage fees are for physical services provided in the countries of Amazon warehouses.
Physical services provided from outside the UK and EU are usually outside the scope of VAT and that is why Amazon doesn't provide you with any form of Tax Invoice for these.
Digital services provided over the internet are taxable (VAT) in the customers (your business) country of establishment but this also depends on if Amazon treats you as a consumer or a business.
Have you provided Amazon with your GB VAT number.
When you enter your GB VAT number on Amazon they start to class you as a business for VAT purposes instead of as a consumer if you have not provided them with it.
This is important when thinking about the tax rate that applies to digital services such as Amazon Seller Frees and Advertising Costs.
If you have not entered your VAT number on amazon then as a consumer they will usually charge you 20% VAT on all digital services such as Amazon Seller Frees and Advertising Costs.
However if you have entered your VAT number then they will treat you as a business customer and usually no VAT will be charged and Amazon will not provide any form of Tax Invoice for these services from the point at which you entered your VAT number.
How to check what tax rates apply to fees
To be 100% sure of what tax rate to apply to Amazon Seller Fees and Advertising Costs it is a good idea to check your tax invoices from within Amazon Seller Central.
Log in to Amazon and switch to the correct region (US, JP, AU etc.) and then navigate to:
Reports > Tax Document Library > Seller Fee Tax Invoices
There you will find all of your tax invoices for fees where Amazon has charged VAT.
Open up some of your most recent ones and check the tax rates applied.
Here is an example of what an invoice looks like where 20% VAT has been charged:
What if I am still unsure?
Reach out to support and send us copies of your latest tax invoices (of each type) and we can check these for you.