Dec

Amazon Benefits from Higher VAT in the UK for eBooks

Parliament in the United Kingdom recently convened to discuss the issue of lowering the VAT on ebooks sold in the country. Many publishing companies wanted to lower the 20% extra people pay for their digital ebooks. A few days ago they again decided not to reduce the fee, which is a boon for Amazon. The Bookseller reports David Gauke, the UK’s exchequer secretary, said the UK could not do this and remain in compliance with European Union law, which classes electronic media as services rather than goods and requires they be taxed at the higher rate.

Amazon is benefiting from the higher VAT fees because their head of European operations is based in Luxemburg, where the VAT has been recently lowered to only 3% on ebooks. This ensures that people who live in the UK who want to buy content will pay only the paltry 3% instead of the 20%.

The UK government is aware of these sorts of tactics and feels that it gives Amazon too much of a competitive edge. The EU has mandated that they will revise the way VAT is paid in 2015 so that buyers will pay the tax of their country rather than that of the vendor.

via Teleread

Michael Kozlowski (1787 Posts)

Michael Kozlowski is the Editor in Chief of Good e-Reader. He has been writing about electronic readers and technology for the last four years. His articles have been picked up by major and local news sources and websites such as the Huffington Post, CNET and more. Michael frequently travels to international events such as IFA, Computex, CES, Book Expo and a myriad of others. If you have any questions about any of his articles, please send Michael Kozlowski an email to michael@goodereader.com