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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 00_NOP (559413) on Monday October 22, 2012 @08:43AM (#41727985) Homepage

    Because they are actively selling goods they must know to be unfit for purpose.
    What if a retailer sold you something they said was wine when it was simply water? Would you not think that was an issue even if they did it thousands of times and refused to stop when the problem was pointed out to them?

  • by tuppe666 (904118) on Monday October 22, 2012 @09:21AM (#41728369)

    Thankfully, it is axiomatic that Stallman Is An Extremist,

    DRM is bad http://www.defectivebydesign.org/ [defectivebydesign.org] "Digital Restrictions Management is technology that controls what you can do with the digital media and devices you own. When a program doesn't let you share a song, read an ebook on another device, or play a game without an internet connection, you are being restricted by DRM." most users would argue wanting to do those things isn't extreme.

  • by tuppe666 (904118) on Monday October 22, 2012 @09:37AM (#41728499)

    This is not only a problem for publishers (which pay 20% instead of 3%) but also for the equivalents of the IRS. Amazon is paying a lot less taxes than it should in other countries by leveraging that extra 17% in two ways: benefits, and gaming the input/output VAT.

    No that is not what is happening the Publishers pay Nothing; Zero; Zilch; Nada; Nothing. Amazon also pay Nothing; Zero; Zilch; Nada; Nothing. The *Final* customer pays the standard rate which is 20% in the UK and the Government gets it ALL.

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

  • by Anonymous Coward on Monday October 22, 2012 @10:11AM (#41728803)

    It would have to be a very small company then. I run a one-man-band ltd company in the UK, and it is VAT registered. Having a VAT registration is very often a requirement from customers, and it is needed if I would want to reclaim VAT paid on goods purchased (which I dearly want to, otherwise it would come straight out of my margin).

    There is nothing strange or new here:
    * VAT works as it is supposed to do (you pass it on to your customer).
    * A (near) monopolist is taking advantage of their strong hand. Could be something for the regulators to look into.
    * Guardian journalists showing that having a clue is not mandatory.

  • by dcarmi (940742) on Monday October 22, 2012 @10:14AM (#41728835)

    Indeed you are right that VAT is a consumer tax. Transactions between companies are not VAT-rated (unless they themselves are the consumers). However...

    Due to a loophole, Amazon pay VAT for books sold in the UK to the Luxembourg Government (at 3%). I am no VAT expert and it is a stupidly complicated tax but it may well be that Amazon is forced to pay UK VAT on ebooks it buys from UK publishers because they are the end of the chain and seen as the consumer for UK tax purposes. In fact Amazon UK is classed simply as a distributor. The real business is in Luxembourg

    Amazon now class themselves as just a distributor in the UK with their main business located in Luxembourg. On UK sales of £3.3 billion last year they paid precisely no UK tax. Amazon in Luxembourg employ 134 people, who must work very hard indeed compared to the 2300 box pushers in the UK. Amazon also get a Federal tax credit in the US because they pay (ahem) tax abroad. This means they pay less than the standard rate (35%) companies would normally pay.

  • Related link... (Score:5, Interesting)

    by SternisheFan (2529412) on Monday October 22, 2012 @10:25AM (#41728971)
    From BoingBoing's Cory Doctorow, a former bookseller himself. http://boingboing.net/2012/10/22/kindle-user-claims-amazon-dele.html [boingboing.net]

    "If it's a choice between paving the way for tyranny and risking the loss of your digital life at the press of a button by some deceived customer service rep, and having to remember a password, I think the password is the way to go. The former works better, but the latter fails better. A note to anyone from Amazon PR contemplating sending me a comment regarding this: I expect that any comment from Amazon regarding this story will disclose whether and when Amazon can delete files (including files loaded by users) from Kindles, and whether DRM-free files can still be deleted. Also: as a policy, I do not quote anonymous spokespeople for firms unless they are telling me something that could cost them their jobs."

  • Re:VAT (Score:2, Interesting)

    by Anonymous Coward on Monday October 22, 2012 @10:43AM (#41729171)

    So that is piracy of services what goes on the internet, not piracy of products as far as the EU is concerned. I wonder what would be the consequences of this definition..

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