Friday, 22 February 2013

Time for Amazon to pay

Pennines in snow
E-book sellers Amazon, Kobo and Barnes & Noble are located in Luxembourg.  In January 2012 France and Luxembourg dropped VAT rates on e-books to 3% so that the tax charged on both printed and digital books would be equal. That might seem fine, but in the UK, the tax on e-books is 20%. Infringement of the VAT rules on e-books distorts the single market and runs counter to the fundamental EU principle of fair tax competition.

Objections were put forward last October but there have beent no changes in the situation. Several Ministers and representatives of both paper and electronic publishing industries have voiced concerns over the negative effect on sales in their domestic markets, and so the EC has referred the matter to the EU Court of Justice.

It is interesting to know that Amazon requires UK publishers to pay most of the 20% VAT charge on e-book sales even though Amazon pays only 3% in Luxembourg.  It is not clear if Amazon passes on such gains to its customers. In going digital, Amazon has avoided the effects of piracy that so harassed the music industry and has no hesitation in admitting that, with all its massive clout, the company seeks the most advantageous arrangements, and is doing nothing illegal (apart from undercutting tax laws. Surely that is illegal?)

Their goal, they say, is to make it easy for readers  to obtain the books they love…and to offer greater access to those books. Well, that's fine for readers, and for Amazon. I suppose it is also great for authors. It is not so great, in fact it is hugely detrimental to UK publishers. It is common knowledge by now that though Amazon generated sales of £3.3billion via its UK website in 2012, it paid zero corporation tax to the UK on profits from that income. Over the last three years, sales have raked in more than £7.6 billion - but no corporation tax has ever been paid on profits.
All I can say is, Remember Starbucks, Amazon, and cough up.
If anyone wants to read a longer article on the subject, here's what the Guardian had to say last October: Pay up


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