Amazon’s Additional Digital Services Fee from 1st October: Is It Really Happening?
You may have heard that, from 1st October, Amazon will introduce a new standalone Digital Services Tax (DST) fee, which will now appear as a separate line item on your invoice. This means the fee will be itemised independently from other charges.
The Digital Services Tax is a government-imposed fee for Canadian sellers, recently introduced by the Canadian government. While this tax is new for Canada, it has been in place in the UK and certain EU countries since 2021. As a result, Amazon sellers in Canada should prepare for potential cost increases due to the new DST implementation.
If you're not selling in Canada, what does this mean? Your fees will not increase on 1st October if you're selling in the UK, France, Italy, or Spain. Since 2021, Amazon has already factored the DST into its fees by increasing Selling on Amazon fees in the UK, France, Italy, and Spain, as well as Fulfilment by Amazon (FBA) fees in the UK and France.
What’s actually happening on 1st October? From 1st October 2024, if you sell in the UK, France, Italy, or Spain, Amazon will reduce the current Selling on Amazon and FBA fees and introduce a separate, standalone Digital Services Tax fee. This fee will be listed separately on your invoices, providing greater transparency.
For sellers in Canada, starting from 1st October 2024, you’ll be charged an additional 3% on your FBA fees, which will be itemised on your invoice.
What is the DST? The Digital Services Tax (DST) is a government tax that applies to large service providers in the UK, France, Italy, Spain, and Canada. The typical DST rate is 2% in the UK and 3% in France, Italy, Spain, and Canada.
Example of Amazon’s Digital Services Tax fees:
If your business is based in the UK and you sell a £20 item in the UK store, a 2% digital services fee will apply to your Selling on Amazon fees (£0.06 on £3.00) and FBA fees (£0.09 on £4.40).
If your business is based in France and you sell a €30 item in the FR store, a 3% digital services fee will apply to your Selling on Amazon fees (€0.14 on €4.50).
How is the tax calculated? For example, in the UK, this is a 2% increase on Amazon fees, not an additional 2% on your item’s selling price. So, your total invoice will be 2% higher than it would have been previously. For instance, a 15% fee will now become 15.3%.
FAQ:
Does this impact my Sponsored Ads spend?
No, the digital services fee does not apply to your advertising spend. In the UK, for example, the 2% increase applies only to referral fees, FBA fees, and monthly FBA storage fees for items sold within the UK.
Will the DST apply to me if I sell in the US?
The digital services fee does not apply to domestic sales if your business is established in the US and you sell in the US store. However, if you sell in the US store but your business is based in a country where DST is in effect (UK, France, Italy, Spain, or Canada), the fee will apply to your US sales. The fee rate and applicable charges will depend on the country where your business is established.
Why is there so much discussion about this fee if it doesn’t increase the overall cost for UK, France, Spain, and Italy sellers?
By separating the DST from other charges, it provides a clearer breakdown of costs, making it easier to see exactly what you’re being charged for. As of 1st of October Amazon’s new Digital Services Tax fee will be listed separately from other fees like referral or fulfilment charges, giving you greater transparency and control over this specific cost.
This change will be reflected in our Tambo Compass Profit Pulse 360 as an optional view, allowing sellers interested in tracking this fee separately from Amazon FBA fees to do so.
