UK legislators accuse eBay & Amazon for failure to tackle VAT frauds

A panel of legislative bodies in the United Kingdom have prosecuted renowned e-commerce giants Amazon and eBay for not having taken appropriate actions to prevent the tax fraud by vendors on their online platforms. Further on, they have insisted on calling upon the companies to remind them for cooperating with the government’s tax authority to resolve critical tax-related issues.

As per reliable sources, frequent frauds by China-based sellers, who have been using the online platforms provided by Amazon and eBay, have resulted in a loss of GBP 1.5 billion (USD 2 billion) a year in VAT (value added tax) to the UK Treasury.

According to the results of an investigation published by the Public Accounts Committee, the companies had been ignorant and slow to undertake even basic actions, such as mandating norms to provide their VAT registration numbers for combating fraud. The investigation also mentioned that the rate of VAT fraud is likely to surge, given that foreign firms selling goods to UK customers through online marketplaces are storing some of their inventory in UK-based warehouses to deliver it the next day - by which sellers evade a VAT of 20% on goods stored in UK.

According to reports by MPs, Amazon & eBay were significantly profiting from vendors who defraud the UK taxpayers by failing to charge VAT.

In 2016, the UK government had introduced new measures to cut down on VAT frauds taking place in the online marketplaces, which included the authority to hold the online marketplaces liable for VAT fraud carried out through their platforms. However, the committee reported these measures to be totally ineffective.

Both the e-commerce giants, Amazon and eBay, have however, clarified that they are co-operating with the tax authorities to tackle online VAT fraud. eBay notified that it wants a “fair marketplace”, while Amazon said it would promptly remove any seller found to be violating tax rules. Additionally, the company is also offering information, training, and tools to vendors that would help them meet their VAT obligations, cite sources.

A panel of legislative bodies in the United Kingdom have prosecuted renowned e-commerce giants Amazon and eBay for not having taken appropriate actions to prevent the tax fraud by vendors on their online platforms. Further on, they have insisted on calling upon the companies to remind them for cooperating with the government’s tax authority to resolve critical tax-related issues.

As per reliable sources, frequent frauds by China-based sellers, who have been using the online platforms provided by Amazon and eBay, have resulted in a loss of GBP 1.5 billion (USD 2 billion) a year in VAT (value added tax) to the UK Treasury.

According to the results of an investigation published by the Public Accounts Committee, the companies had been ignorant and slow to undertake even basic actions, such as mandating norms to provide their VAT registration numbers for combating fraud. The investigation also mentioned that the rate of VAT fraud is likely to surge, given that foreign firms selling goods to UK customers through online marketplaces are storing some of their inventory in UK-based warehouses to deliver it the next day - by which sellers evade a VAT of 20% on goods stored in UK.

According to reports by MPs, Amazon & eBay were significantly profiting from vendors who defraud the UK taxpayers by failing to charge VAT.

In 2016, the UK government had introduced new measures to cut down on VAT frauds taking place in the online marketplaces, which included the authority to hold the online marketplaces liable for VAT fraud carried out through their platforms. However, the committee reported these measures to be totally ineffective.

Both the e-commerce giants, Amazon and eBay, have however, clarified that they are co-operating with the tax authorities to tackle online VAT fraud. eBay notified that it wants a “fair marketplace”, while Amazon said it would promptly remove any seller found to be violating tax rules. Additionally, the company is also offering information, training, and tools to vendors that would help them meet their VAT obligations, cite sources.