Amazon warns small businesses will pay price for Digital Services Tax

Small business owners may soon be paying the price, once Amazon’s releases its new regulations for its smaller sellers. Digital tax is decided through the amount of goods sold through the platform but it may surpass the government’s 2% planned tax, which could mean smaller businesses will struggle to keep up. Amazon UK businesses earn on average £5bn between themselves each year, but this could be set to shift.

The New Regulation in Amazon

On March 11, a new regulation known as the “digital services tax” will come into play, which will affect all the amount of tax paid out. The 2% levy could see as much as £500m more a year coming to the government. Smaller businesses may soon need to look at investment loans to ensure they can keep up with costs; reliable and trustworthy options can ensure businesses can still continue to work effectively without the worry of not being able to pay out.

Amazon bosses state that the UK isn’t the first country to implement this rule, as France had previously introduced a 3% levy in the summer of 2019 for small business owners.

Independent business owners fuel Amazon in recent years, so it’s vital that the rise does not damage business finances to the point that they no longer can use the platform; this could result in catastrophic drops in sales for Amazon. It is believed that the levy can be managed easily but again it is worth seeking financial advice from professionals to see what assistance may be needed.

Amazon is the biggest retailer in the world

Amazon rakes in billions in revenue, in America alone, numbers were raised to around $160bn in one year alone, which proves the success of the platform for independent businesses; it is unlikely it will cause any major damage to businesses pulling out. Whilst home and beauty remain the top contenders, we may see trends shift as we move into 2020.

Amazon UK earned £10.9bn in the same year, but it is not known much corporation tax was paid. Amazon, and online shopping has recently paved the way for a new era of shopping, which has damaged the high street shops; more people opt to buy online than from shops on the high street, which may see a shift for more smaller businesses moving to Amazon as their chosen selling platform.

Around 35 countries that Amazon operates in have begun to implement their own tax levies, which may vary from country to country. The 2% rise in the UK has not yet been solidified but there is certainly going to be a “supranational approach” to the taxing services, which UK Amazon boss Gurr states.

Small businesses should not suffer greatly with the shift in regulations but it is worth noting that advice and financial guidance could be greatly beneficial to ensure that no money is lost and the correct provisions are set into motion before any changes occur within the company.

We will gladly advise those who have any concerns relating to the financial implications and advice on attaining business loans.