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At least one government is cracking down on cross border trade tax evaders. The U.K. has announced plans to get tough on importers and foreign suppliers that fail to pay the required Value Added Tax or VAT.
Representatives of eBay and Amazon have been summoned by U.K. tax authorities for an emergency meeting about the issue. Message: You are enabling the evaders. The e-commerce platforms response: We are a third- party facilitator, not the seller. We have tools on our websites that explain tax laws and payment processes. The compliance burden is on them, not us.
The authorities are no longer buying this for several reasons. First, there's a serious loss of tax revenue. Second, shop owners in the high streets have organized previously diffuse efforts and now complain loudly that foreign freeloaders unfairly compete against them. Third, lawmakers are skeptical of the claim that platforms aren't liable for collecting and paying taxes, especially given the fact that Amazon operates distribution centers in the U.K. that also serve the European continent. Fourth, although many of the transactions may involve small companies that don’t understand their obligations, some of the transactions involve intentional evasion
The tax man cometh
No doubt part of the problem is the complexity of VAT rules, which include a requirement that foreign suppliers register with tax authorities if annual sales exceed 82,000 pounds sterling, or about $130,000. British retailers say there are plenty of such sellers with no physical presence in the country, other than the Amazon distribution warehouse. Instead, they are based in China, Hong Kong, and the U.S. Tax authorities know how much UK businesses sell because they have the tax returns. No such information exists on the offshore sellers.
If your sales meet or exceed the taxable amount, you are required by law to register, get a VAT number, and send the tax you collect from your European customers. That means making adjustments on your website and specifying this cost on your eBay Amazon, or WPG store pricing policies.
There there’s the problem of fraud. A report in the Guardian newspaper states that traders operating from addresses in China use phony or stolen VAT numbers to get goods through U.K. Customs via the eBay website. When the Guardian produced evidence, eBay reported the miscreants to the authorities, who can intercept future shipments and pressure eBay and other sites to ban them from their sites.
Last week, a member of Parliament claimed the e-commerce platforms were conspiring with hundreds of offshore fraudsters to cheat the taxman out of "millions of pounds of revenue." Amazon and eBay vigorously denied the charges. It does seem preposterous that there's any collusion going on, but the see no evil defense that "we're just middlemen" is wearing a little thin, especially for local shop owners who claim they've been injured by unfair, if not illegal, competition.
One thing seems obvious: Duties and consumption tax policies were crafted for a different time and didn't contemplate e-commerce. Just in the last decade small package imports into the UK have quintupled. Must be in part due to tax collection anomalies, you might churlishly conclude. Consumers know bargain when they see it, but some online items are priced the same as what you’d find in the shops. The sellers are pocketing the unpaid VAT, which is 20 percent of the purchase price and shipping.
At minimum, the platforms need to do a better job policing their sellers, including sharing sales totals with national tax authorities when they approach the amount at which VAT registration is required. If no registration exists, further transactions can be suspended until the papers are filed.
Just as some states in the U.S. have moved to close sales tax loopholes that gave online sellers a free ride, look for the EU to even the playing field.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| CRV40XH/3AS NTN | 25.4 | 63.5 | 39.6 |
| CRV36XH/3AS NTN | 22.225 | 57.15 | 33.3 |