How to Calculate Amazon Sales VAT Implications

How to Calculate Amazon Sales

Amazon is a huge platform focused on giving e-commerce entrepreneurs a central place to establish their businesses. However, some start-up company owners have yet to learn about their various protocols, as well as acquire some tips and tricks to further elevate their negotiating skills. One of the vital competencies needed to last long in this field is to handle various monetary requirements, such as the calculation of value added tax (VAT) on Amazon Sales.

A feature in Amazon which business owners should know, especially when they are interested in selling their products in different countries, is the Fulfillment by Amazon (FBA). This program allows business owners to post their products, with Amazon shipping them at an agreeable rate. Knowing the VAT on Amazon Sales is a great way to kickstart your journey into achieving your global domination of product selling.

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Amazon VAT

As a known channel for different brands, Amazon has established its dominance in being one of the best e-commerce companies to date. And like all businesses, they also add a consumption tax to all products listed under their system. This allows the company to earn and continue serving as an online business channel.

Amazon has a certain feature that aids in calculating the value added tax which helps sellers on the platform identify not only their sales price but also the consumption rates added on the products’ overall costs. The Amazon Vat Calculation Service (VCS) is a convenient way for small business owners in the platform to calculate their products vat-free while still sending an invoice with consumption costs included to transaction partners.

Half of the products and services offered on Amazon usually have a twenty percent VAT charge, but some businesses are an exception. Health products have a reduction rate of five percent, while books and goods that are sold in non-EU countries get zero vat rates.

Amazon Selling Plans

This enterprise which established its root on the internet, currently offers two types of selling plans:

  • Individual Plan – If a business has just started and sells less than 40 products a month, they are obligated to pay only $0.99 for every product sold on Amazon.
  • Professional Plan – Those availing of this plan are usually bigwigs in online selling. They usually have to pay six to twenty-five percent fees on closing and referral. They pay $39.99 monthly; however, they do not have a VAT charge per item sold.

Amazon Charges to Consider

Aside from VAT, Amazon also has various tariffs to be paid depending on product type and services offered. These are:

  • Fulfillment Charge – This Amazon rate depends on the product specifications, such as dimension and weight. Ranging from $2.41 to $10, they usually increase depending on product size.
  • Referral Cost – This is mainly based on the item category. Amazon asks for a per-item minimum charge of referral. This may be taken as a part of the sales price and ranges from six to twenty percent of product sales. Another way to get referral cost is by taking it on a minimum charged from pieces of jewelry and has a rate of $2.
  • Variable Closing Cost – This type of charge Amazon applies to music, books, video games, and BMVD items. They fluctuate depending on the category, shipping location, and preferred shipping services.
VAT Calculators Settings

Some businesses are under the flat rate scheme and sell products not listed on Amazon’s standard charge. In these cases, the internet can offer a list of VAT calculators free of charge. One example is http://www.vatcalculator.co.uk/ which is accessible and easy to understand. It gives an overview of various monetary aspects of sales, such as net and VAT costs.

GM Professional Accountants have offices Located in London, Birmingham and Essex.

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