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Monday, October 22, 2012

Amazon Overtaxing? Screwing With Publishers?

Business Shark
 Amazon has a base in Luxembourg which requires that Amazon only has to pay a 3% VAT (Value Added Tax) to the government for UK ebook sales.

So why is Amazon making British publishers pay 20% VAT on ebook sales? And is this even legal? Seems to me no private company can be a taxing authority. Right or wrong?

Every time I get HALFway convinced that Amazon is really not all that bad and just employs aggressive (but hopefully legal) business practices, they do something devoid of good ethics.

On top of abusing the VAT subsidy, Amazon is always negotiating other discounts that often result in publishers/writers receiving less than 10% of the ebook price.

Amazon is just NOT a friend of publishers/writers --- Yet, many believe they are the best thing next to sex. I just don't get it.

More details provided by Telegraph.co.uk, the online daily:

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 difference between the UK VAT levy imposed on publishers and the actual 3 per cent that Amazon pays amounts to an extra £1.38 of profit every time it sells a £10 ebook in the UK.

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.

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