Amazon to escape digital services tax while small traders using its marketplace get hit

AMAZON will escape the new digital services tax, it was reported last night.

But small traders who use its online marketplace will be hit.

Last year, Boris Johnson insisted that big US tech firms must pay a 'fair' amount of tax on their UK revenues — Last year, Boris Johnson insisted that big US tech firms must pay a ‘fair’ amount of tax on their UK revenuesCredit: Getty

The tax, announced in April, was designed to make major firms with profitable businesses in Britain pay their share towards the nation’s public services.

However, Amazon, whose British tax bill last year was £293million on sales of £13.73billion, will not have to pay the levy on goods it sells itself, according to The Times.

Instead it will have to pay the two per cent charge only on revenues it receives from third party sellers that pay to use its marketplace platform.

The retail giant announced that it will pass on this cost in higher fees.

In effect this means it will not be liable for the charge and so gain a competitive advantage over smaller retailers that use its platform.

Conservative peer Lord Leigh of Hurley, told the Lords: “This seems to me to be absolutely outrageous.

“It’s clear the UK government is not taxing Amazon properly and is allowing it to avoid tax on its own sales through the marketplace.”

The digital tax follows the failure to reach an international agreement on taxing technology firms that operate in many jurisdictions.

Digital firms, such as search engines, social media platforms and online marketplaces, have to pay a two per cent tax on all revenues derived from British users.

But concerns that this could negatively affect traditional retailers such as John Lewis, which have online sales platforms, meant the Government stopped short of levying it on sales.

This has spared Amazon from paying the tax on goods it sells directly.