For many eCommerce businesses, tax is probably the most unglamorous part of their operations. However, eCommerce or digital tax becomes even more tricky when companies are operating across borders. Around the world the relevant regulatory agencies in many cases are themselves lagging behind effective regulatory measures. Over the past few months eCommerce has grown to record sales. Regulators are wiser thus there has been a push for a digital or eCommerce tax. Some even call it an Amazon tax in certain countries to reflect the companies utter dominance in the marketplace.
Tax Compliance
Tax compliance is key to having a successful global eCommerce operation especially with the fast growth of industry. A coordinated approach is essential. From accounting, procurement, compliance, tax and other teams to ensure companies stay on the right side of local authorities. Fortunately, tax compliance in mind is a part of the best ecommerce systems. Businesses must also ensure global compliance is part of their corporate culture by leveraging tax and compliance professionals. Moreover, they must align with key business segments reflecting the local cultural differences.
Digital Service Tax
In the UK we are already witnessing the effects of eCommerce taxing with the recent increase in the country’s Digital Service Tax. Starting from September the so-called Amazon tax will be increased by 2%. This will bring in about £2 billion in revenue for the government. The eCommerce giant has announced it will pass this cost on to the UK SMEs. This will increase the cost of the Amazon shopping experience for ordinary customers.
This increase is part of a wider effort from British authorities to clamp down on often opaque corporate tax avoidance strategies. However, many of the traditional retailers in the UK are in encouragement of this new Digital tax. Amazon is probably the biggest factors in the death of the UK high street. Regardless, this increased levy would be seen as a proactive government measure for those who share a similar perspective.