Amazon Raises Seller Fees Due To Digital Tax In France

With a 3 percent digital tax passed by the French government, Amazon is hiking seller fees for small and medium-sized businesses in France beginning in the fall. The eCommerce company cited the tax as the reason for the increase, CNBC reported.

Amazon said in a statement, according to the report, “This tax is aimed squarely at the marketplace services we provide to businesses, so we had no choice but to pass it down to selling partners. We recognize that this may place small firms in France at a competitive disadvantage to their counterparts in other countries.”

One seller, for instance, began a jewelry company in 2011 creating custom pieces such as bracelets, rings and necklaces. She began to sell her items on Amazon two years ago and brings in one-fifth of her sales from the eCommerce marketplace. The seller will now pay Amazon 12.36 percent of her sales compared to 12 percent before. According to the outlet, she noted that any fee hike hits profits, as margins are already tight from materials costs and other taxes. She must either absorb the higher costs or increase prices.

The news comes after reports surfaced in April that France’s lower parliament has passed a proposed tax that targets the revenue of tech giants like Google, Amazon and Facebook. The finance minister of France had the prior month announced the 3 percent tax, which targets digital businesses with $845 million or €750 million in global revenue and €25 million in domestic revenue.

The tax was reportedly to apply to approximately 30 major companies, mainly from the U.S., and is expected to help France generate $565 million each year. At the time, it was noted that the proposed tax could spark the legislation of internet companies in other European countries.

There was speculation that a European Union-wide digital tax could be instituted, although an effort to pass a 3 percent digital tax failed last year because of objections by Germany and Ireland.