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India lands Amazon's merchant model with VAT bill

  • VAT
  • 17 September 2014 | Richard Asquith

India lands Amazon's merchant model with VAT bill

Tax authorities in the Indian region of Karnataka have assessed a large VAT bill on Amazon's merchant trader service.  It views Amazon as taking on a commissionaire role rather than a simple provider of goods delivery services.

VAT on Fulfillment by Amazon

The Fulfillment by Amazon (FOA) service is a global service Amazon offers to sellers (merchants) of goods on its online website.  It provides delivery of goods to anywhere in the world for e-retailers, enabling them to expand their potential markets exponentially.  In addition to delivery, Amazon also rents space in its global warehouses to merchants to enable them to store goods in each major region so that they can then deliver goods within a day to two once an online sale has been made.  Throughout the process, the legal title of the goods remains with the merchant - Amazon is only providing a goods delivery service.

India assess VAT on Amazon as commission agent

However, tax authorities in India have taken the view that Amazon is a reseller of goods, and therefore liable to account for Indian VAT.  The tax office is also assessing the merchants for having a local place of business or permanent establishment by renting warehouse space from Amazon.

The tax office is taking the view that Amazon is a 'commissionaire', acting on behalf of the merchant and therefore liable to charge VAT.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.