Britain is tightening tax enforcement on e-commerce sellers as the government moves to curb VAT evasion in online retail. The planned change shifts collection responsibility to marketplace operators and is set to take effect from October 2027.
Highlights
- UK government will require online marketplaces like Amazon, eBay, Temu, Shein, and Alibaba to collect VAT from sellers to prevent tax evasion.
- The new VAT collection rules apply to UK sellers registered for VAT or making over £90,000 annual sales on an individual online marketplace.
- Revenue from tighter online VAT compliance will help fund business rate cuts for physical retailers, supporting high street competitiveness.
VAT collection rules for online platforms
As reported by Reuters, finance minister John Healey says in his budget speech to parliament that the government will strengthen requirements for online marketplaces so sellers cannot avoid paying VAT when they sell online.Under the change, online marketplaces including Amazon, eBay, Temu, Shein and Alibaba become responsible for collecting VAT charged on sales by retailers using their platforms. The finance ministry says the measure is designed to tackle VAT evasion and support competition by helping ensure businesses that pay the tax they owe are not undercut by those that do not.
Impact on UK retail competition
The rules apply to UK businesses that are VAT registered or make sales of more than £90,000 on an individual online marketplace. The threshold defines which sellers fall within the new collection framework.Healey says the revenue raised will help fund business rate cuts for physical stores. The policy links tougher online tax compliance with support for bricks-and-mortar retailers facing competitive pressure.
In our earlier article on Malaysia’s efforts to tighten oversight of foreign products and e-commerce activity, we covered plans to improve enforcement coordination and strengthen the legal framework as cross-border online trade expands. The government discussed steps such as an inter-ministerial working committee, work on an e-Commerce Bill, and programmes to promote local SMEs and rural products on digital platforms to support fairer competition.
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