Amazon Calls for UK VAT Reform to Tackle Fraud

On October 27, 2025, Amazon published a public statement outlining its perspective on current VAT rules, arguing for reform, and positioning the company as aligned with the interests of small businesses and the UK government. The public statement includes relevant data on the number of small businesses Amazon supports, the revenue they generate, and why the reform is needed.

Key Insights from Amazon's Statement

In its public statement, Amazon highlighted that it supports over 100,000 small and medium businesses (SMEs) in the UK in digitalising operations, expanding customer reach, and increasing both domestic and international sales. Amazon noted that in 2023, UK-based SMEs that sell through its platform generated GBP 3.8 billion in export sales, and that the company collected GBP 6 billion in VAT since 2021 under the UK’s Deemed Reseller rules.

However, current regulations have led to confusion among compliant sellers and created loopholes that allow fraudulent actors to exploit the system by falsely claiming to be UK-based. As determined by the independent analysis commissioned by Amazon, around GBP 3.2 billion in sales each year across all UK online marketplaces are made by sellers evading VAT obligations through deceptive practices such as false UK establishment claims.

Amazon's public statement further underscores that, since the introduction of the Deemed Reseller rules, fraud has become more sophisticated, involving shell companies, forged documents, and organized efforts to circumvent VAT enforcement. More importantly, government and market controls did not contribute to the more effective detection of these evolving schemes.

Even though Amazon makes extensive internal efforts to combat VAT fraud and protect honest businesses, including investing heavily in advanced analytics, verification systems, and compliance teams that collaborate with HMRC and enforcement agencies, hiring hundreds of employees to ensure accurate VAT collection and prevent abuse, the current VAT rules still leave plenty of room for VAT fraud and evasion.

Considering that both the UK’s National Audit Office and the Public Accounts Committee have recognized the need to strengthen VAT collection by suggesting closer integration between company and tax registration systems, Amazon supports the proposed measures with one caveat. The proposed reform could potentially take up to a decade. Therefore, immediate action, such as extending the Deemed Reseller rules to cover all sellers, regardless of their establishment, must be taken to close existing loopholes.

Conclusion

With the UK Government’s ongoing review and the upcoming Autumn Budget, Amazon sees a timely opportunity to make necessary updates to existing VAT rules and reinforce VAT compliance. Amazon contends that the proposed measure will increase public revenue by up to GBP 700 million annually. Moreover, the tech and e-commerce giant noted that Switzerland and the European Commission have already introduced or are reviewing similar measures.

Source: Amazon