In spring of 2020, the UK government introduced a Digital Services Tax (“DST”). While the legislation was being passed, and as we continued our discussions with the government to encourage them to take an approach that would not impact our selling partners, we absorbed this cost.
Now that the legislation has passed, we want to inform you that we will be adjusting referral fees, Fulfillment by Amazon (FBA) fees and monthly FBA storage fees. We will not apply the increased charges retroactively, but starting September 1, 2020, the fee types mentioned above will increase by 2%. Additionally, starting September 15, 2020, we will increase Multi-Channel Fulfillment (MCF) fees by 2%.
What is the UK Digital Services Tax?
The UK government introduced a 2% tax on the revenues of large multinational enterprises generated from the provision of search engines, social media platforms, and online marketplaces, which derive value from UK users. See here for more information.
How much will fees increase?
Referral fees, Fulfillment by Amazon (FBA) fees, monthly FBA Storage fees, and Multi-Channel Fulfillment (MCF) fees in the UK will increase by 2%.
To calculate the increase on fees that are a cash value (for example, FBA fulfillment, MCF, and storage fees), you should add 2% on to the cash value. For example, a £2.27 fulfillment fee becomes £2.32 (£2.27 + 2% = £2.32).
To calculate the increase on referral fees rates that are percentage based, you should add 2% to the absolute fee amount. For example, a 15% referral fee on a product sold for £100 would currently equate to £15. As of September 1, 2020, this will increase by 2% or £0.30 to become £15.30, or the equivalent of a 15.3% fee rate. Please note that the increase is not an increase of 2 percentage points.
Which fees are being increased?
The following fee types are being increased in the UK starting September 1, 2020:
Referral fees: These are calculated as a percentage of each ordered product’s gross sales proceeds. The increase will be applied to referral fees across all categories, including fee promotions, for items sold on Amazon.co.uk.
Example: On an item for which the referral fee on Amazon.co.uk is currently 15.0%, you will pay a fee of 15.3% starting September 1, 2020.
FBA fulfillment fees: FBA fulfillment fees are a flat fee that you pay per unit shipped using FBA, based on the product type, its dimensions and its weight. The increase will be applied to the UK rates on all envelope and parcel sizes (including oversize) for domestic FBA, Pan European FBA, Cross-border (European Fulfillment Network), and Small and Light.
Example: For a parcel with a current UK domestic rate of £2.27 (standard parcel, less than 0.5 kg), you will pay a fee of £2.32 starting September 1, 2020.
Monthly FBA storage fees: Monthly storage fees are calculated based on the space you use to store your items in an Amazon Fulfillment Center. The storage fee is based on the daily average volume in cubic feet per month and varies between low season (January to September) and high season (October to December). The increase will be applied to the UK rates across all categories, standard size, oversize, and low and high season rates. Long term storage fees will not be increased at this time.
Example: For the standard size storage rate in the UK, which is currently £0.65 per cubic foot per month, you will pay a fee of £0.66 per cubic foot per month starting September 1, 2020.
Multi-Channel Fulfillment (MCF) fees: MCF fees are charged to fulfill orders from other websites using inventory stores in our fulfillment centers. The increase will be applied to the UK rates on all envelope and parcel sizes (including oversize) for domestic FBA, Multi-Channel inventory (MCI), Pan European and Cross-border (European Fulfillment Network) shipments, for both standard and expedited services.
Example: A parcel with a current rate of £4.00 (standard parcel, less than 0.5 kg), you will pay a fee of £4.08 starting September 15, 2020.
Unless the fee type is stated above, it will not be subject to the 2% increase at this time.
If the monthly FBA storage fees are being increased starting September 1, 2020, when will I see the increase in my invoice?
The increased inventory storage fee for September will appear on your October invoice, which will be raised between October 7 and October 15. Learn more about storage fee invoicing dates here.