eBay will NOT pass UK Digital Services Tax to SMEs

eBay will NOT pass UK Digital Services Tax to SMEs

eBay have announced this afternoon that they will pay the UK Digital Services Tax which the government is levying on large internet based businesses. Unlike some other marketplaces, eBay will not pass the UK Digital Services Tax to sellers in the form of fee increases.

This is fantastic news and it’s also the honourable thing to do. The tax was never intended to apply to UK SMEs and indeed was intended for businesses, who while they’ve always paid the tax due under UK law, have been perceived not to be paying their fair share. It’s a response to businesses which are domiciled overseas and the UK Government described this as a misalignment between the place where profits are taxed and the place where value is created. In order to redress the balance a little the 2% UK Digital Services Tax is being levied on search engines, social media services and online marketplaces which derive value from UK users effective the 1st of April 2020.

“Under the current international tax framework, the value businesses derive from user participation is not taken into account when allocating the profits of business between different countries. This measure will ensure the large multinational businesses in-scope make a fair contribution to supporting vital public services.”
– HM Revenue & Customs

With many businesses facing costs from ever increasing competition, the UK exit from the EU and on top of that the Coronavirus pandemic, the last thing anyone wants is to see their marketplace invoice have 2% tacked on in tax that was never intended to be imposed on UK SMEs.

We (and you) often complain about eBay so we want to say right here that we’re dead impressed that they’ve taken the decision to do the right thing and cover the tax themselves in the manner it was intended to be applied and not copy competitors by passing it on to you.

“eBay is one of the marketplaces which will have to pay the new tax – and a lot of you have asked whether we at eBay will be passing on this tax to our sellers in the form of new fees.
We wanted to reassure you that we won’t do that, so you will not be charged additional new fees as a result of this tax.
A big thank you to all 300,000 of you who sell on our platform and continue to make eBay a diverse and vibrant marketplace for sellers of all sizes.”

– eBay UK

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