Amazon is about to be clobbered with a big new tax, and its first instinct is to slam third-party sellers with higher costs

jeff bezos

  • Amazon said it is going to raise fees for its
    third-party sellers in France by 3% after being hit by the new
    digital services tax in the country.
  • The new tax was approved by the French Senate in July.
    It requires tech firms with global revenue of more than €750
    million, or $831 million, to pay a 3% tax on sales.
  • The tax is unusual in that it relates to revenue, not
    profit. Amazon, Facebook, and Google are all fighting to resist the
    levy.
  • Amazon’s plan to pass the buck to third-party sellers could
    further raise tensions with firms that do business on its
    platform.
  • Visit
    Business Insider’s homepage for more stories
    .

Amazon is about to be stung with a new tax in France but rather
than absorb the cost itself, it’s passing it on to third-party
sellers in a move that could further raise tensions with firms that
do business on its platform.

The French government last month approved plans to clobber tech
companies with global sales of more than €750 million ($831
million), with a 3% levy on their revenue, in addition to the more
traditional method of taxing profit.

Amazon, Facebook, and Google are all fighting to resist the
levy,
submitting evidence
last week to an
investigation by US Trade Representative Robert Lighthizer
into
France’s new tax plan.


In its submission
, Amazon said third-party sellers in France
will see fees increase by 3% from October 1 to account for the new
digital services tax. On Monday, Jeff Bezos’ company doubled down
on this plan.

Read more:
Silicon Valley is about to go into war mode against a new French
tax on big-tech revenue

“Because we operate in the highly competitive and low-margin
retail industry and invest heavily in building tools and services
for selling partners and customers, we cannot absorb an additional
consumption tax that is based on revenues instead of profits,” a
spokesperson for the company told
Forbes
.

“This tax is aimed squarely at the marketplace services we
provide to businesses, so we had no choice but to pass it down to
selling partners.” Amazon is expecting this to trickle down to
consumers in France as small businesses are likely to raise prices
to account for these higher fees.

Amazon did not immediately respond to Business Insider’s request
for comment.

“Amazon will use them when necessary and dispose of them when
appropriate. There’s no love there.”

Amazon’s plan to pass the cost of France’s new tech tax onto
French businesses may be a lobbying technique, but it risks
heightening existing tensions with third-party sellers.

Amazon’s third-party platform is one of the most valuable areas
of its businesses,
accounting for $307 billion of the company’s $1.1 trillion
enterprise value
and
comprising 58% of all merchandise sales
. For comparison, its
first-party platform is worth $93 billion.

But while these sellers are a crucial part of Amazon’s business,
Amazon is also likely a crucial part of their business too as for
many, this might be the only way to sell their products to a wider
audience. This means that Amazon has the power to raise fees
without having to worry too much about a mass exodus from the
platform.

Amazon has come under
scrutiny for its business practices on its third-party platform

– specifically for its role as both a platform for merchants and
a seller as
reports
surfaced indicating it had been using sellers’ data to
create its own versions of best-selling items.

As a result, third-party sellers are gearing up to
complain to the Department of Justice and Federal Trade Commission
about why Amazon is competing against them too.

“I think a lot of sellers sense who they’re up against and that
Amazon’s not their friend,” Paul Rafelson, a tax law attorney at
Francissen Rafelson Schick, LLP whose practice is focused on
helping Amazon sellers, told
Business Insider’s Rachel Premack
. “Amazon will use them when
necessary and dispose of them when appropriate. There’s no love
there.”

SEE ALSO: Silicon
Valley is about to go into war mode against a new French tax on
big-tech revenue


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Source: FS – All Tech News
Amazon is about to be clobbered with a big new tax, and its first instinct is to slam third-party sellers with higher costs