Amazon prices rise as Chinese sellers’ VAT loophole is closed

Amazon prices rise as Chinese sellers’ VAT loophole is closed

The price of Chinese products sold on Amazon and eBay has jumped after tougher tax rules came into force on January 1.

Online marketplaces now have to account for the VAT paid on products sold on their platforms by third party sellers through deducting the tax at source. The change was made amid growing concern that thousands of mainly Chinese sellers were evading the tax by using fake VAT numbers and shell companies to sell products in effect tax-free.

Analysis of platforms such as eBay and Amazon suggests that the move has had an instant effect, with potentially tens of thousands of products rising in price significantly overnight. Many items are now about 20 per cent more expensive.