Amazon Introduces Digital Services Fee for Canadian Sellers

New Tax Leads to Fee Changes

In response to Canada’s new digital services tax (DST), Amazon is changing how it charges Canadian sellers. Starting October 1, 2024, Amazon will introduce a digital services fee to cover the cost of this new tax.

Canada joins several European countries, including the UK, France, Italy, and Spain, in adopting a DST. While these taxes typically range from 2% to 3%, their application can be complex and unpredictable, varying based on factors such as business location and customer demographics.

Amazon’s Approach to the New Tax

To simplify matters for sellers, Amazon is setting a fixed fee. This fee will be based only on the seller’s location and the Amazon store they use, rather than the complicated factors of the DST.

For Canadian businesses, this digital services fee will be an extra charge on top of the regular Selling on Amazon fees. The exact fee will depend on which Amazon store the seller uses.

New Fee Structure According to the Amazon Services team

“For example, if your business is established in Canada and you sell a $15 item in the Canada store, you’ll be charged a 3% digital services fee ($0.07) on Selling on Amazon fees ($2.25) for sales starting October 1”. The $2.25 fee now will be $2.32 starting October 1st.

“If you sell in the Canada store but your business is established elsewhere, such as the US, the digital services fee will apply to sales made in the Canada 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 the US and you sell a $15 item in the Canada store, you’ll be charged a 2% digital services fee ($0.05) on Selling on Amazon fees ($2.25) for sales starting October 1. If your business is established in the US and you sell a $15 item in the US store, the digital services fee will not apply”.