In the past, retailers only had to worry about obeying the financial and commercial laws of their country of origin. Today, sprawling online marketplaces that sell to a global consumer base have to navigate every individual country’s laws, and it doesn’t always go smoothly.
The Guardian reported that Amazon and eBay may be conspiring with vendors to avoid paying value-added tax (VAT) on products sold and shipped in the U.K. An investigation conducted by the newspaper found that many nominally VAT-free vendors with addresses listed in China, Hong Kong and the U.S. may have been using falsified information to skirt U.K. tax law when importing goods ahead of the holiday shopping season.
How big of an issue could this be for Amazon and eBay? According to Financial Times, the topic has already been brought up in Parliament, with several members of the House of Lords calling for an official investigation of the retailers’ practices by Her Majesty’s Revenue and Customs (HMRC).
"HMRC has established a task force to undertake operational and intelligence-gathering to investigate this form of VAT evasion by overseas online retailers,” Lord Ashton, spokesman for the Treasury, said on Tuesday (Dec. 22).
Ashton also told FT that the House of Lords and HMRC have been in contact with Amazon and eBay for at least a month about this issue. According to Ashton, a meeting was held in November between both agencies, and representatives from both retailers were present.
In a statement to FT, Amazon denied any wrongdoing or collaboration with tax-skirting vendors.
"Marketplace sellers are independent businesses responsible for complying with their own VAT obligations,” an Amazon.co.uk spokesperson told FT. “We do offer tools and information to assist sellers with their compliance, but we don’t have the authority to review their tax affairs."
EBay similarly denied any culpability, which could set up a lengthy investigation for the HMRC.