Amazon will add a new fee on October 1st, and some local accounts will be charged twice

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.

On October 1, 2024, the Canadian government officially implemented the Digital Services Tax (DST), marking Canada's joining the ranks of countries such as the United Kingdom, France, Italy and Spain 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.

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 .

💦 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.