From 1 October 2024, Amazon is introducing a stand-alone Digital Services Tax (DST) fee as a separate line item on your invoice. But what does this mean for you, and how do you work it out?
The UK Digital Services Tax – an Explainer
But what is the DST?
Basically, it’s a levy on the revenues of search engines, social media platforms and online marketplaces that was designed to target those large international companies who pay less than their “fair share” of UK taxes.
The UK government, alongside others like France, Italy, Spain, and Canada, introduced this tax to “align profits with the value created locally”.
So why is it impacting our brand?
Because Amazon is passing it on to you, the retailer.
The idea was to tax the big players, but the reality is that the cost trickles down to sellers like you – and ultimately, if you don’t absorb it yourself and squeeze your margins, to the consumer.
Argh! How do we work out what we’ll pay?
You’ve actually been paying it since September 2020, when Amazon increased UK selling fees by 2% (which covered the DST).
It’s just that, from October, Amazon is introducing the fee as a separate payment – reducing your selling and FBA fees and introducing a separate charge that’s based on when your business is based.
For example, if you’re in the UK, you’ll face a 2% DST on your fees; in Italy, it’s 3%.
How can you plan in advance?
You can preview these fees in the Revenue Calculator starting in September and track them via Payments reports.
And Amazon’s Automate Pricing tool will also account for DST from October, so at least you’ll be able to see how you’re being impacted.
Want to revisit your pricing strategy? Now’s the time – speak to our expert team for their specialist insight.