Amazon Supports UK VAT Reform to Plug £3.2 Billion Tax Gap
Amazon has publicly supported a reform proposal by the UK's Treasury aimed at extending VAT rules for 'Deemed Resellers' to all sellers. This move seeks to close the loophole that allows non-UK sellers to masquerade as local businesses to evade VAT, which involves annual sales of around £3.2 billion. If passed, the reform will significantly enhance the price competitiveness of compliant sellers.
What are the key facts?
- 1Amazon
- 2UK VAT reform
- 3£3.2 billion tax gap
- 4Deemed Reseller rules
What happened?
On June 30, 2026, Amazon announced its support for a tax reform consultation by the UK government. The reform plan aims to extend VAT withholding rules (Deemed Reseller) to all sellers to eliminate the phenomenon of non-UK sellers disguising themselves as local businesses to evade a 20% VAT. It is estimated that this loophole involved online sales of up to £3.2 billion per year.
What does this mean for cross-border sellers?
For compliant local and FBA sellers in the UK, this move will eliminate unfair price competition and enhance profit margins. Non-UK sellers need to reassess their tax compliance costs to avoid account risks due to tax violations.