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    US Tax Changes

    In the US, the tide is turning against online retailers like Amazon. What does this mean for UK retailers? If you’re a bricks and mortar retailer, you’ll have heaps of overheads – rent, electricity, gas, business rates, public liability insurance, state tax and many, many more…

    Yet, if you’re an online business such as Amazon, you can just swoop in, sell the same products to the same consumers – all without having to pay those same overheads. And plenty has already been said about Amazon’s tax position (a blog for another day).

    Doesn’t seem fair, does it?

    But in the US, this is changing

    You might be aware of recent news from the US on the obligation for online retailers to register and collect state tax in the US, even where they don’t currently have a physical presence. It means a business will have a tax obligation where the transaction takes place on the consumer’s side, rather than vice versa.

    Under the US’ Wayfair movement, there’s been a landmark case in South Dakota, and it’s likely that other states will now put similar legislation in place.

    What does this mean for UK retailers?

    For those retailers who are based and operate solely in the UK, and do not sell online in the US, there is unlikely to be any impact. However, if you have trade with the US online, it’s likely that you may be impacted by the new regulations in some way. Even those with a relatively small online presence will need to consider their exposure for US sales tax. And as this will be applied on a state by state basis, that’s no mean feat.

    The impact is still being digested but this could considerably increase the admin burden and potential tax cost of trading online in the US.


    SUKI KAUR, Tax Partner

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