Amazon forces ebook VAT on publishers
The online retailer Amazon charges publishers a UK tax rate despite having a tax dispensation because it is based in Luxembourg.
Amazon is making British publishers pay 20 per cent VAT on ebook sales, despite their true VAT cost for UK ebook sales being closer to 3 per cent.
From 2006, the online retailer has been based in Luxembourg, where the company only has to pass 3 per cent VAT to the government for UK ebook sales. (There is no VAT on printed books in this country.) Despite this, Amazon starts negotiations with UK publishers on the basis that the UK VAT rate of 20 per cent must be lifted from the cost price.
The company negotiates further discounts on top of the VAT subsidy, which in some cases can result in publishers receiving less than 10 per cent of the price paid by the online customer.
Richard Murphy, founder of the Tax Justice Network, told Sky News Luxembourg’s 3 per cent tax rate on ebooks is being taken advantage of by Amazon.
“Luxembourg has this low VAT level to make publishing more accessible – and although Amazon is exploiting this, it is not passing it on to the industry.”
Amazon said: “Our goal is to make it easy for readers to discover and read the books they love by expanding access to millions of books in both digital and print.
“We’ve been able to do this by focusing on innovation, as exemplified by Kindle, and by offering customers the widest selection at the best possible prices and service.”
A publisher, who refused to be named said: “These are not pleasant people to do business with,” one senior publishing executive said. “They have no compunction in shutting down the buy button on their site on our titles if we step out of line,” a practice that can be carried out in seconds.
Amazon holds huge power in the digital publishing market, selling nine out of ten ebooks in the UK.
About First Edition Design Publishing:
First Edition Design Publishing is the world’s largest eBook and POD (Print On Demand) book distributor. Ranked first in the industry, First Edition Design Publishing converts and formats manuscripts for every type of platform (e-reader). They submit Fiction, Non-Fiction, Academic and Children’s Books to Amazon, Apple, Barnes and Noble, Sony, Google, Kobo, Diesel, 3M, Ingram, Baker and Taylor, Nielsen, EBSCO, and over 100,000 additional on-line locations including retailers, libraries, schools, colleges and universities. The company’s POD division creates printed books and makes them available worldwide through their distribution network. First Edition Design Publishing is a licensed and approved Aggregator and holds licenses with Apple and Microsoft.