If you have gone through the Accounts & Taxes wizard after 2nd May 2023 for your Amazon account connected to Link My Books, then automatic product grouping is turned on automatically for you by default.
We'll use your Amazon Product Tax Codes to correctly group your products into the following three product groups:
Standard Rated Products
Reduced Rated Products
Zero Rated Products
All you need to do is ensure that you have set up your products correctly on Amazon using the correct product tax codes and we'll do the rest.
IMPORTANT: For accounts set up before 2nd May 2023
You will have had the choice to turn on product grouping and automated product grouping during the wizard. If you're unsure if you have set your account up correctly we suggest that you first go back through the Accounts & Taxes wizard (via the Accounts & Taxes menu), then contact support if you still have any questions.
What is an Amazon Product Tax Code?
A Product Tax Code (PTC) is an Amazon-defined code that has the correct set of VAT rates across the EU and UK for a specific product category. As a default, the PTC "A_GEN_STANDARD" will be set for all products. This PTC applies the standard rate of VAT in all taxable jurisdictions.
Both VAT Calculation Service and VAT Services on Amazon use the PTC to determine the appropriate VAT rate to apply to sales and refunds of your products.
The help page VAT Rates and My PTCs on Seller Central contains a list of the VAT rates for each country in the EU and the UK, as well as a list of all valid PTCs that you can assign to your product listing.
How does automatic product grouping work?
When you receive a new payout from Amazon, Link My Books downloads the settlement report from Amazon.
In order to process that settlement we also download the VAT report from Amazon too.
We use two versions of the Amazon VAT reports:
VAT Calculation report (Available 2-4 days after the date of the payout)
VAT Transactions report (Available on the 5th of the month following the payout)
We only need one of these reports so if you have the Amazon VAT Calculation service turned on then we use the VAT Calculation report since it is available soon after the payout date.
We mainly use these reports to correctly group your sales revenue to ensure the correct tax rates are applied. However we also use them to check the PTC for each item you have sold to ensure they too are correctly grouped and have the right tax rates applied.
The process is as follows:
You receive a payout from Amazon.
After 12-48 hours Amazon make the settlement report available via the API and we fetch it.
The settlement is marked as Awaiting VAT Data.
All products sold/refunded as part of the settlement have their PTC checked in the VAT report.
Products are grouped as per their PTC.
We process the settlement using the VAT report and the updated product groupings.
The settlement is marked as ready to send.
This process ensures that the settlement cannot be sent to Xero or QuickBooks before your products have been correctly grouped and the correct tax rates applied.
💡Good to know
In the time between use receiving your settlement report and it being marked as ready to send you may notice products are in the wrong product groups. Don't worry though, once the settlement is marked as ready to send all products will have been re-grouped based on their Amazon product tax codes.
What to do if your Amazon Product Tax Codes are wrong
Since we rely on the Amazon Product Tax Codes to automatically group your products for VAT, it's important that they are setup correctly on Amazon Seller Central.
If your PTC's are wrong then Link My Books will not be able to accurately group your products and apply the correct tax rate.
You should update your PTC's on Amazon and then from that point onwards any new settlements will be correct.
💡Good to know
If you also need to send older settlements to Xero or QuickBooks and your PTCs were previously wrong you should manually check and group your products on the Inventory > Product Groups page in Link My Books.
How do I update my Product Tax Codes on Amazon?
Product taxability rules are applied by PTC and are specific to jurisdictions, as outlined in the Amazon Product Tax Code list here. A PTC can be assigned at the item and/or default level.
Default level: The default level PTC will apply to all of you products on all of your marketplaces.
To view or edit the default level PTC:
In Seller Central, go to Settings
Click on Account info
Then click on VAT calculation settings
Click on Continue to go through to page 3, VAT defaults
View or change your default PTC
Click Save settings
Item level: The seller-defined item PTC is used to designate a specific PTC to a single listing (on a marketplace level only), which will override the seller-defined default PTC.
To view or edit item level product tax code:
In Seller Central, go to Manage Inventory
Click Edit for the individual product
This will take you to the Edit Product Info page
In the offer tab locate the Tax Code field
Assign your seller-defined product tax code
Click Save and finish
The following tools are available in Seller Central to assist with updating individual product detail pages:
To edit multiple listings in bulk use Inventory file upload.
To add a new listing use Add a Product tool.
For PTC override with flat file or XML, refer to page 5 here.
Tax Calculation Setting updates will become effective within 5 hours but could take as long as 48 hours.
If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].