Amazon will add another fee on October 1st

Amazon will add another fee on October 1st



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Recently, Amazon issued an announcement that it will launch a digital service fee starting October 1st!



Among them, when the company is located in the United Kingdom and France , the digital service fee needs to be deducted twice: commission x rate + Amazon logistics fee x rate.



The implementation of the digital service fee will take effect on October 1


On October 1, 2024, the Canadian government officially implemented the digital services tax (DST), which means Canada joins the ranks of countries such as the United Kingdom, France, Italy and Spain to begin to impose additional taxes on digital services. To this end, Amazon will also launch a digital service fee to cope with this change and help sellers adapt to the new tax environment. .



What is the Digital Services Fee?

This is actually a fee caused by the implementation of digital service taxes (DST) by various governments, with the main target being global Internet giants. The tax rate and scope of application may be different in each country. For example, the tax rate in the UK is 2%, while the tax rate in Canada, France, Italy and Spain is 3%.


But digital service tax fees are unpredictable because they vary based on your business location, customer location, and other factors. To avoid unpredictable business impacts based on location variables, Amazon has simplified the process and introduced a unified digital service fee. The rate is still based on the digital service tax rate of each country.


For example, if your business is incorporated in the United States and sells products in the US Marketplace, you will not be charged a Digital Services Fee for domestic sales.

However, if your business is located in a country that has implemented a digital services tax, such as Canada, the United Kingdom, France, Italy, or Spain, the digital services fee will apply even if you sell products in the US Marketplace.


In fact , this fee was implemented in several European sites as early as September 2021, and this update is mainly because the Canadian government has also begun to require a digital service tax.


According to the introduction, the only companies affected are those established in the countries (sites) listed by Amazon as being required to pay digital service tax, that is, the so-called foreign local accounts .



How is the digital service fee calculated?


💦 The exact calculation depends on the country your company is based in. Amazon’s announcement example shows:


  • Canadian Companies: If your company is incorporated in Canada and sells an item valued at $15 in the U.S. marketplace, starting October 1, Amazon will charge a 3% Digital Services Fee (approximately $0.07) on your Selling on Amazon fee ($2.25).

  • UK companies: If your company is established in the UK and sells an item worth $15 in the US Marketplace, starting October 1, Amazon will charge a 2% digital service fee (approximately $0.05) on your Selling on Amazon fees ($2.25) and a 2% digital service fee (approximately $0.07) on your Fulfillment by Amazon fees ($3.30).


💦For countries that need to pay digital service fees, the specific fee details are as follows:



As shown in the figure, when the company is located in the UK and France, the digital service fee needs to be deducted twice: commission x rate + Amazon logistics fee x rate.


💦Expense preview and tracking


To help sellers better understand the impact of these fees, you can preview the upcoming digital services fees in the FBA Revenue Calculator starting September 1, 2024. You can also track these fees through the Transaction Overview feature in your payments reports starting October 1.


Special attention is required! ! ! !


Amazon announced two days ago that starting from August 15, 2024, it will charge an advertising management fee for ads placed on the Canadian site. This so-called "ad management fee" is in response to the digital service tax ! In order to comply with these regulations, Amazon has to pass on part of the costs to sellers to ensure the compliance of advertising services.


The advertising management fee rate in Canada is consistent with the digital service tax rate, which is 3% . However, unlike the calculation method of the digital service fee, the advertising management fee is calculated based on the tax rate of the country (site) where the buyer who clicks the ad is located.


Therefore, when sellers are subsequently pricing or calculating costs in the product pricing sheet (profit statement), please remember to include this expense in the calculation to ensure accurate profit calculation.


In summary, whether it is advertising management fees or digital service fees, the implementation of this series of policies means that advertisers and sellers need to re-examine their advertising and sales strategies on the Canadian site and plan their budgets reasonably to ensure the sustainability and efficiency of advertising campaigns and sales operations.



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