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Amazon sellers facing the brunt of new digital Tax by the French Government

    Key Points

Opinions of Amazon Sellers in France :

An Amazon seller of Women’s Fashion category was not happy to see the message from Amazon stating that the “Fees for sellers like her in France will be increased by 3%”. The online sellers target many marketplaces to sell their products. Most of the sellers say that they generate only one-fifth of the sales from the Amazon. And on top of that, if Amazon is raising seller fees by 3% then it will affect their profit margins to all the amazon sellers.

The Amazon sellers fee is going to be increased on October 2019 and it would be levied on all small and medium-sized French businesses. Amazon’s move of increasing the seller fees appears to conflict the aim of the French government of equalizing the playing field between small and medium-sized and big tech enterprises. This action of increasing digital tax would further complicate France’s effort of regulating companies like Facebook, Amazon, and Google.

New Digital tax levied by the French government:

French Government’s main motive was to target companies that have a yearly turnover of up to 750 million euros ($832 million) from “Digital Activities”. The tax would be applied retroactively from 1st January 2019 and it is predicted to raise 500 million euros per year.

The French government is already facing brunt from President Donald trump Administration and American companies. Trump administration initiated the probe and threatened retaliatory tariffs saying that the “New Digital Tax levied by France government unfairly targets American Companies”.  Big tech firms like Amazon and economists have warned the French Government that the tax increase will affect the consumers as they would be required to pay higher prices.

Peter Hiltz, Amazon’s director of international tax policy and Planning, called the French government 3% tax policy as “discriminatory” and “harmful”. He also said in his statement, that the new digital tax would negatively affect thousands of small and medium-sized businesses that leverage the Amazon platform to reach customers in France.

Amazon View on New Tax imposed :

Amazon said in a statement “The Tax is imposed on marketplace services and we have no choice other than passing it down to our selling partners”. It also said that “we understand that this move will place small firms of France at a competitive disadvantage with their competitors of other countries.

Many small business sellers are of the view that selling on Amazon itself is a stressful experience. Sellers who deal in artistry products prefer Etsy platform, as it brings in 70% of the total sales as Etsy charges only 10% in fees. The sellers apart from paying the seller fees, marketplace advertising also spend on social media marketing to drive traffic to their website.In prepared testimony, the Big giants like Google, Facebook and Amazon voiced concerns on France unilateral approach of digital tax imposition. They said this move of the French Government will encourage other countries to take similar measures.