Amazon & Etsy Add Regulatory Fees For Canada Digital Services Tax Compliance
UPDATE 8-27-24
Etsy has reportedly informed some Canadian sellers they are delaying the effective date for the Regulatory Fee until August 29.
Ecommerce marketplaces are reacting to Canada's new Digital Services Tax, instituting Regulatory Operating fees passing costs of regulatory and tax compliance directly to sellers on their platforms.
Etsy has quietly slipped a provision into their fees and billing policy that will add a 1.15% Regulatory Operating fee for Canada sellers (on top of existing selling and ad fees) effective August 15, 2024.
According to Etsy seller and ecommerce consultant Cindy Baldassi, Etsy did not publicly announce the change, opting to simply add a small banner on the appropriate policy page instead of proactively informing sellers of the change.
Similarly, Amazon has announced additional fees will be added on October 1st to account for Digital Services Tax in Canada, the UK, France, Italy, and Spain but due to location variables that can make the exact calculation complicated, they will be using a fixed fee dependent on the seller's location and which country specific Amazon site is being used.
The Canadian government recently implemented a digital services tax (DST), similar to those of the UK, France, Italy, and Spain. On October 1, 2024, we’ll introduce a digital services fee to account for DST.
While the typical DST rate is 2% in the UK and 3% in Canada, France, Italy, and Spain, DST charges are unpredictable as they vary based on the location of your business, the location of the buyer, and other factors. Rather than base the digital services fee on these location variables, which would create an unpredictable business impact because you can’t know the location of customers who will buy your products, we’ll introduce a fixed digital services fee based only on your location and the store in which you sell.
The digital services fee won’t apply to domestic sales if you’re established in the US and sell in the US store.
If you sell in the US store but your business is established in a country in which DST has been introduced (the UK, France, Italy, Spain, and Canada), the digital services fee will apply to sales made in the US store. The fee rate and what it applies to will vary based on the country in which your business is established. For example:
- If your business is established in Canada and you sell a $15 item in the US store, you’ll be charged a 3% digital services fee ($0.07) on Selling on Amazon fees ($2.25) for sales starting October 1.
- If your business is established in the UK and you sell a $15 item in the US store, you’ll be charged a 2% digital services fee ($0.05) on Selling on Amazon fees ($2.25) and a 2% digital services fee ($0.07) on FBA fees ($3.30) for sales starting October 1.
To better help you understand how this fee will affect your business, including rates by country and examples, go to Digital services fee.
Starting September 1, you’ll be able to preview the fee in the Revenue Calculator, and from October 1 you can track your digital services fees via the Transaction View in your Payments reports. If you use Remote Fulfillment with FBA, the digital services fee will be accounted for in our free Automate Pricing tool starting October 1.
eBay introduced a Regulatory Operating Fee for UK, Austria, Belgium, France, Italy, Ireland, Netherlands, Poland, Spain, and Switzerland in April, but so far there has been no announcement about whether Canada will be added to the mix.
Liz Morton
Have you encountered Regulatory Operating Fees on other marketplaces? If so, let us know which ones in the comments below!
