This is in German with not the greatest subtitles but I still think it worth sharing:
Hat tip: Richard Allen
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
My German’s a bit rusty but basically the German proposal is the one that should have been imposed on Amazon’s consignment selling activities from the outset: Amazon distributes goods from foreign (mainly Chinese) suppliers to the customer in its market and collects the agreed fee from the customer. Amazon then deducts its commission from the customer’s remittance, and at present simply pays the net sum to the supplier. Thus the VAT is not collected in the country of sale and the supplier makes a (VAT-free) killing.
The Germans are now proposing for all consignment sales to make Amazon, not the supplier, liable for the accounting of VAT to the German authorities, so it (Amazon) will have to deduct the VAT from the amount paid to the supplier and remit that to the authority. However this will necessitate a change to EU law to enable that to happen and that change is unlikely to happen before 2022. (Could that be because Brexit has caused disruptions and delay to the EU’s legislative processes? Just guessing).
Such a simple solution and the only one that makes any practical sense, so why did nobody think of it before Amazon started facilitating VAT avoidance and destroying domestic supplies’ businesses?
Some of us tried to get this a long time ago
The UK is now moving ion this direction….
The cost has been billions of tax foregone
Back in the 1980s I was invovled in a number of anti-dumping cases. The first one was microwave ovens (I worked for the Japanese). The case was brought by EU microwave oven mfus against Japanese and Korean mfus (the Koreans were the ones doing the dumping). The French were unhappy & hit on the simple tactic of having all microwave imports into France routed for customs clearance through Poitiers (I’m not making this up btw) – where exactly two customs officers worked. The Japanese got the message and microwave oven factories sprang up all over Europe.
In the case of the Chinese problem. Each country should decide which port all Chinese imports go through. VAT, is then paid before the goods are released. No payment – no realease of goods. Whilst this might make goods more expensive, I’d argue that we have far too much of a consumer society already – having a bit less would do no harm. Air freight – the same. Rail (there is a rail connection China – Germany) the same. Single point of clearance. Chinese would not like it – I wonder what they would do – stop selling stuff to the EU?
It’s a way to do it
Making Amazon and eBay collect the VAT owing may be just as effective now because that is where it is believed that much of the abuse is happening
A prediction: making a large company pay taxes will be framed as ‘anti-business’.
Oddly enough, nobody ever interviews all the businesses losing revenue to a major competitor who pays a lower rate of tax, or none.
We need to work on that.
Agreed
It’s easy to see why Amazon are doing this. It’s to seize market share by any means, to drive competitors out of business and to achieve a monopoly position that they can then exploit to all our cost.
What’s less easy to see is why the UK authorities are not doing anything about it. Under the UK’s Criminal Finances Act 2017 it is a strict liability criminal offence for any company to fail to prevent its employees from facilitating tax evasion. The penalty is a fine on the company. There is no limit to the magnitude of the fine. Deliberately turning a blind eye is facilitation so on the face of it, it appears that Amazon commits this offence many times per minute.
The UK authorities could prosecute. They could hit Amazon with a massive number of massive fines. But it’s not happening. Why?
PS: The cynic in me knows I really don’t need to ask.
The cynic in you is right, at so many levels