Amazon to Introduce Digital Services Tax (DST) as a Standalone Fee

​​Starting October 1, 2024, Amazon will introduce a standalone digital services tax fee, which will appear as a separate line item on your invoice. This means that this fee will be itemized separately from other charges. 

Since 2021, Amazon has been accounting for DST by increasing Selling on Amazon fees in the UK, France, Italy, and Spain, and FBA fees in the UK and France. 

By separating DST from other charges, it provides you with a clear and distinct breakdown of the cost, making it easier to see exactly what you’re being charged for. In the case of Amazon’s new digital services tax fee, it will be listed independently from other fees like referral or fulfillment charges, allowing you to identify and manage this specific cost more transparently.

If your business is based in the UK and sells in the UK, you may see a reduction in your referral or FBA fees. However, this reduction will be offset by the introduction of the standalone digital service fee, which will apply to sales in the UK store. 

Let’s break down what the digital services fee means for you.

Note: The Digital Services Tax is a new fee for Canadian sellers, recently imposed by the Canadian government. While this tax is a fresh development for Canada, it has been in effect in the UK and select EU countries since 2020. As a result, Amazon businesses established in Canada should brace for potential cost increases due to the new DST implementation.

What is the Digital Services Tax (DST)?

The Digital Services Tax is a charge levied on companies like Google, Amazon, and Apple by various governments. Naturally, Amazon is passing these costs on to sellers. This fee impacts sellers in Canada, the UK, France, Italy, and Spain, and it’s layered with several complexities.

Fixed Digital Services Fee for Greater Predictability

Amazon is introducing a stand-alone digital services fee to provide more predictability and transparency for sellers. The company recognizes that DST charges are inherently unpredictable due to their dependence on various factors, such as the location of the seller’s business, the buyer’s location, and other variables.

If DST were to be applied based on these fluctuating location factors, sellers would face an unpredictable impact on their business, as they cannot foresee where their customers will be located.

By implementing a fixed digital services fee based primarily on the seller’s location and the store in which they sell, Amazon aims to simplify the process and eliminate the uncertainty that comes with variable DST charges.

This approach allows sellers to better anticipate their costs and plan their business strategies more effectively, without the added complexity of location-based DST calculations.

Who Will Be Affected?

DST impacts sellers in the UK, France, Italy, Spain, and Canada. With the recent updates, it’s crucial to understand how these changes will affect your business:

• Business Establishment: In the UK, sellers typically face a 2% DST, while those in France, Italy, Spain, and Canada encounter a higher rate of 3%. Starting October 1, 2024, Amazon will reduce certain Selling on Amazon fees (and FBA fees for UK and France) that were previously increased due to DST. However, as previously mentioned, this fee reduction will be counterbalanced by the new standalone DST fee, applicable to sales made in marketplaces where the digital service charges apply.
• UK and France: A digital services fee of 2-3% will apply on Selling on Amazon and FBA fees for transactions in Amazon Canada, US, and Mexico stores.
• EU and Canada: For businesses established in France, Italy, Spain, or Canada and selling in the UK, a 3% digital service fee will apply to sales in the UK store, affecting cross-border selling within Europe. These EU-based sellers need to be aware of the dual impact of fee reductions and the introduction of the new DST.
• Italy, Spain, or Canada: A 3% digital services fee will be applied to Selling on Amazon fees for transactions made in the Amazon Canada, US, and Mexico stores.
• Canadian Sales: If you sell on Amazon Canada, you’ll be charged a 2-3% fee on referral fees, regardless of where your business is based.
• Pan-European FBA: For users of Pan-European FBA, the digital services fee will be accounted for in the free Automate Pricing tool starting October 1. This specific adjustment ensures that sellers using this program will see the DST reflected in their pricing automatically.

Breaking Down the Fees

Here are some real examples:

• American Business Selling in Canada: If you sell a $15 product on Amazon Canada, you’ll pay your regular referral and fulfillment fees plus an additional 2% DST fee. This will cost you an extra $0.05.
• French Business Selling in the US: If you’re a French company selling in Amazon US, you’ll pay 3% on referral fees and another 3% on fulfillment fees for that same $15 product, which amounts to $0.17.
• Canadian Business Selling in the US: Starting October 1, 2024, a Canadian business selling a $15 item in the US store will be charged a 3% digital services fee ($0.07) on Selling on Amazon fees ($2.25).
• UK Business Selling in the US: A UK business selling a $15 item in the US store will be charged a 2% digital services fee ($0.05) on Selling on Amazon fees ($2.25) and a 2% digital services fee ($0.66) on FBA fees ($3.30), $0.11 total.‍
• UK Business Selling in the UK: If your business is based in the UK and you sell a £15 item in the UK store, you’ll incur a 2% digital services fee. This will translate to an additional £0.05 on your Selling on Amazon fees (£2.25) and £0.07 on your FBA fees (£3.30), £0.12 total.

New Ad Fees Starting August 15th

From August 15th, you’ll notice a new line item in your ad invoices. DST fees will also apply to Amazon advertising. For every ad dollar spent, you can expect to add an extra $0.02 to $0.07 per click in the affected countries.