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Businesses Handhelds The Almighty Buck Your Rights Online

Amazon Overcharging Publishers For Tax 184

Posted by Soulskill
from the business-will-be-business dept.
00_NOP writes "Amazon is taking fire in the UK for insisting that publishers pay them for 20% VAT (sales tax) when in fact the online retailer is only paying 3% VAT. 'The firm is able to wield such power over publishers because it has a near monopoly of the UK digital book publishing market. According to reliable estimates, it sells nine out of 10 ebooks in the UK, while using its Luxembourg tax status to wring more profitable terms from publishers. ... In private, British authors and publishers express fears that Amazon's dominance will send the industry into further decline.' Given that the Kindle is rubbish at displaying maths and science and that Amazon is as dangerous a monopoly as Microsoft ever was, is it not time that regulators and consumers stood up to them?" Amazon is also facing criticism right now for allegedly shutting down a woman's account and remotely wiping her Kindle, then refusing to provide information about why it did so.
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Amazon Overcharging Publishers For Tax

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  • by dragisha (788) <dragisha AT m3w DOT org> on Monday October 22, 2012 @08:49AM (#41728049)

    I am almost-buyer of Kindle and practically all I need from it is science and math... Thanks for tips, and I hope this is read widely. Maybe next year, or decade... But not before all devices are updated to normal-math, acceptable-tables and acceptable-pdf.

    There is another problem I was already aware of - PDF display is, by default, _awful_. I understand why's but I think it is not acceptable at all.

  • The Kindle Swindle (Score:5, Informative)

    by Anonymous Coward on Monday October 22, 2012 @08:51AM (#41728059)
  • Re:VAT (Score:5, Informative)

    by tuppe666 (904118) on Monday October 22, 2012 @08:53AM (#41728071)

    The better question is why are ebooks subjected to VAT in the first place when printed books are not.

    http://www.thebookseller.com/news/uk-government-holds-firm-e-book-vat.html [thebookseller.com]

    in a written response reiterated the government's position "Under EU law, VAT on electronic books must be charged at the standard rate. A reduced rate cannot be applied to digital or electronic supplies, or supplies of text via the internet, as they are classed as supplies of services rather than physical goods. There is therefore no scope in the principal VAT directive to apply a reduced rate on e-books."

  • Not Paranoid (Score:4, Informative)

    by the eric conspiracy (20178) on Monday October 22, 2012 @09:00AM (#41728143)

    And I thought I was just being paranoid about this sort of thing.

    When Amazon first went around deleting books off of people's Kindles I vowed I'd never buy one. Now it appears my apprehension was all too justified.

    I hear the Nexus 7 does a better job with pdfs than the Kindle. It appears to me that's the way I am headed.

  • Off line storage (Score:5, Informative)

    by mprindle (198799) on Monday October 22, 2012 @09:03AM (#41728173)

    "Amazon is also facing criticism right now for allegedly shutting down a woman's account and remotely wiping her Kindle, then refusing to provide information about why it did so."

    This is the exact reason why I strip the DRM from every Kindle book I buy and then store them in my own offline repository. Should Amazon ever decide to wipe my account I'll still have the books I purchased. The other advantage is I can use any e-reader I want w/o being locked to a Kindle.

  • Re:Easy? (Score:5, Informative)

    by Anonymous Coward on Monday October 22, 2012 @09:10AM (#41728233)

    Surely this is merely a matter of tax laws that lawyers and judges are perfectly well equiped to solve?
    If Amazon is a Luxembourg company, than this should be no different from any other Luxembourg company buying and selling products outside Luxembourg borders. Europe has tax laws in place regarding intra-community trade; neither Amazon nor the publisher's opinions matter.

    The summary, once again, is not very clear. In fact the Guardian article isn't 100% clear either, but what appears to be the case is that for a product with an intended retail price of £10 in the UK where VAT is 20%, the base UK price would be £10 / (120%) = £8.33. Amazon allegedly insists on negotiating with UK publishers starting with a base price of £8.33. However, in Europe, Amazon is a Luxembourg company and the VAT rate there is 3% for these products. The base price for a retail price of £10 would be £10 / (103%) = £9.71.

    I don't think it is really the case that Amazon is "charging them VAT" so tax law doesn't really matter - it would be more accurate to say that they are allegedly insisting on at least an extra 17% discount, and hoping that the publishers don't notice that this is not in fact part of the VAT adjustment. Or alternatively, Amazon is accused of keeping all the tax savings it makes by setting up in the EU's lowest VAT area, Luxembourg, and not sharing them with the publishers.

  • by tsa (15680) on Monday October 22, 2012 @09:10AM (#41728235) Homepage

    Yep, they sold me a book about the evolution of storytelling. The paper version contained some figures that they just left out in the Kindle version. And that made the book unreadable. Thank you Amazon, I will certainly buy Kindle books from you again.

  • by SternisheFan (2529412) on Monday October 22, 2012 @09:10AM (#41728239)
    So if this story is true as stated, and she has bought lots of e-books from Amazon, will Amazon refund her all the money she's spent on them? Or does Amazon just 'absorb' that $$$? I'd sue Amazon for actual damages, court and lawyer fees and damages. I can see the future of e-commerce, and this a bad trend starting here.
  • by tuppe666 (904118) on Monday October 22, 2012 @10:46AM (#41729225)

    VAT does not work like you think it does. Businesses do not Pay VAT.

    Sorry pal, but that's not how VAT works.

    There is input VAT and output VAT.

    Businesses do pay VAT, except for later they "cancel" it thanks to the input/output VAT compensation.

    But that's only if input VAT and output VAT are at the same percentage. If you are paid 3% VAT by Amazon but you have to pay 20% VAT to IRS, then you are in trouble. That's exactly what publishers are complaining about.

    I'm not your PAL. Your absolutely right that that there is "output vat" and "input vat", the business gives the *difference* to the government. The Final Customer Pays ALL the VAT!!! The other businesses just collect chunks of it along the way :) hence the *Added* bit. VAT does not work like you think it does.

    The Publishers are complaining they are getting a smaller piece of the pie after discounts have been negotiated, as they are worked out on 120% of the net price not 103% of the net price. Try the maths yourself. Again neither the publishers nor Amazon pay a bean in VAT. Its about dividing the net cost!!

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