Since late 2020 if you are reviewing your Amazon UK (Amazon.co.uk) or Amazon EU (Amazon.de, Amazon.fr, Amazon.nl, Amazon.es, Amazon.it) settlement entries within A2X, you may have noticed amounts of the type, Marketplace Facilitator Tax.
What transactions will appear in settlements?
You'll see transactions like this in your Amazon settlements indicating that Amazon has withheld the tax that was collected, and will pay it on your behalf.
- ItemWithheldTax MarketplaceFacilitatorTax-Shipping
- ItemWithheldTax MarketplaceFacilitatorTax-Principal
You will typically see that the amount withheld will match the amount collected on the order, for example if you saw a tax transaction for £1.16, you would expect that to be withheld completely like this:
What is the Amazon marketplace facilitator tax?
Amazon has been collecting and remitted sales tax amounts for nearly all of the US states for quite some time now. Towards the end of 2020, other Amazon regions and markets have also started collected and remitting sales tax on behalf of sellers for US orders.
Please review Amazon's help article titled: Marketplace Tax Collection for more detailed information.
“A Marketplace Facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of physical property, digital goods, and services through the marketplace. As a result, Amazon is deemed to be a marketplace facilitator for third-party sales facilitated through Amazon.
Marketplace Facilitator legislation is a set of laws that shifts the sales tax collection and remittance obligations from a third party seller to the marketplace facilitator. As the marketplace facilitator, Amazon will now be responsible to calculate, collect, and remit tax on sales sold by third party sellers for transactions destined to states where Marketplace Facilitator and/or Marketplace collection legislation is enacted.”
What does this mean for my A2X account, will anything change?
A2X will separate the orders that the marketplace facilitator tax applies to allowing you full transparency for accounting and mapping separation. This is important for accounting because the "Tax" transactions could relate to US sales tax, or to UK/EU VAT.
When using the 'Group VAT transactions' option in A2X, you'll now see the transaction related to marketplace facilitator tax marked as MFT.
- ItemPrice Principal MFT
- ItemPrice Tax MFT
- ItemPrice Shipping MFT
- ItemPrice ShippingTax MFT
Depending on your current business registrations and VAT obligations you will likely need to separate these MFT transactions so that they do not apply local VAT tax rates. Please check with your accountant or tax adviser on the best way to treat these transactions.
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