UK Plans to Impose VAT on Platforms Such as Amazon and Temu

AMZ123 has learned that, according to a recent report by The Times, UK Chancellor of the Exchequer John Healey plans to introduce new tax measures requiring Amazon,eBayand Temu, among other online marketplaces, to collect value-added tax (VAT) on behalf of merchants selling on their platforms, in a bid to crack down on tax evasion by overseas retailers.

The UKgovernment expects the measure to generate up to 10 hundred million pounds (approximately 13.3 hundred million US dollars) in additional revenue for the Treasury each year. The funds would be used to reduce business rates for brick-and-mortar shops in the UK, helping local sellers ease their operating pressures.

In recent years, some UK retailers have argued that overseas sellers can use existing rules to lower their operating costs and gain a competitive advantage on price, while local brick-and-mortar shops have to bear heavier tax and operating costs. As a result, traditional UK retailers have repeatedly urged the government to take action to address the unfair competitive advantage gained by overseas e-commerce sellers exploiting loopholes in tax and customs rules.

The new measures are understood to require online marketplaces to directly collect VAT on behalf of eligible business sellers, applying to commercial sellers with annual turnover exceeding 9 ten thousand pounds.

Compared with the previous approach, which relied mainly on sellers to report and pay taxes themselves, collecting tax through platforms at the point of sale could reduce the scope for overseas sellers to evade VAT. However, the UK Treasury has not formally confirmed the specific arrangements described in the report and said that tax policies will be announced at fiscal policy-related events.

In addition to requiring e-commerce platforms to collect VAT, the UK government is also pursuing other tax adjustments targeting low-priced cross-border goods. In 6 month this year, Healey said that the UK planned to abolish thecustoms dutyexemption for low-value imported goods and bring forward its implementation to 2028 year 10 month.

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