UK Moves to Close Online VAT Loophole Targeting Domestic Sellers

The UK is proposing to allow online marketplaces to collect value-added taxes from UK-based businesses to close a loophole costing the government hundreds of millions of pounds annually.

The proposal aims to reform VAT rules that Amazon.com Inc. and other retailers claim to contain a “structural gap” that treats UK-based businesses and overseas businesses operating online marketplaces differently, leaving the system open to abuse.

The announcement forms part of a broader package of tax measures announced by the UK government Tuesday, with the aim of reducing administrative burdens, improving certainty, fairness, and overall customer experience.

Since 2021, online marketplaces have ...