alert! Amazon's well-known big sellers were raided for tax inspections, and nearly 40 million fines and taxes were required to be paid!

In the past two years, European tax bureaus have been stepping up efforts to check the VAT tax status of sellers on major e-commerce platforms. They will also trace the business history of stores and require tax reimbursement and additional fines. Now, the French tax department is eyeing a domestic cross-border e-commerce sales.

Recently, Starmark issued an announcement that Sunvalley (HK) Limited (hereinafter referred to as Sun Valley Hong Kong), the company’s secondary subsidiary, received the tax payment from the French French Public Finance Directorate (PUBLIC FINANCES DIRECTORATE GENERAL) on November 30, 2020 Payment notice.

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With the continuous development of Amazon and the rapid increase in global influence, the French government has begun to focus on and check the taxation issues of sellers on the Amazon platform. The French tax department determined that Sun Valley Hong Kong has existed from January 2015 to August 2019. In the case of under-declaration of VAT tax, a tax payment notice was issued to Sun Valley Hong Kong, with a total amount of 4,950,891 euros.

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Among them, from January 2015 to November 2018, a supplementary tax payment of 2.5758 million euros and a fine of 1.9308 million euros; from December 2018 to August 2019, a supplementary tax payment of 306,600 euros and a fine of 137,800 euros; The total amount is about 4.95 million euros, which is equivalent to about 38.29 million yuan.

After receiving the above-mentioned notice from Sun Valley Hong Kong, the company sorted out and self-examined the tax declarations of French stores, and checked with the VAT tax listed by the French Public Finance Administration. Due to disagreements with the amount of fines, the company officially hired a local third-party professional agency in France to apply to the local tax authorities for VAT tax and fine reduction or exemption in January 2021. The company will make the payment in time after the final payment amount is verified.
Xinghui Precision also stated in the announcement that in May 2020, the European Commission decided to implement a new e-commerce value-added tax policy from July 1, 2021. One of the major reforms is that e-commerce platforms such as Amazon will be responsible for it. Collection and payment of VAT taxes. Therefore, in the future, sales through e-commerce platforms in the EU will not have under-declared VAT.

The operating income of the French store of Sun Valley Hong Kong in 2019 is equivalent to RMB 19,222,900, accounting for 0.55% of the company's operating income in 2019. The income is relatively small and has little impact on the company's overall performance.

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▍What is VAT?

VAT refers to the value-added tax number. VAT stands for Value Added Tax, a tax system of the European Union, which is automatically added to the expenses incurred by business activities.

▍Under what circumstances do sellers need to register for VAT and pay VAT?

Simply put, it can be divided into the following points:

First, the product inventory is stored in the country where the product is sold, which means that Amazon sellers need to register in advance as long as they send FBA.

Second, sellers who ship goods through local warehouse stocks in European countries, such as sellers who use overseas warehouses to ship goods.

Third, sellers who ship goods through remote sales between EU countries and exceed the remote sales threshold of the country where they are sold.

▍What do sellers need to do after registering for VAT?

This can be divided into two parts, the first part is the platform aspect and the second part is the tax bureau aspect.

The first thing the seller has to do after registering for VAT is to fill in the tax number on the corresponding platform for binding, and complete the first step of platform tax compliance, which is the first part.

The declaration and payment of tax number is the most important part. According to the requirements of the tax bureau, the seller must truthfully, timely and accurately declare to the tax bureau according to the sales data during the declaration period and pay taxes on time, otherwise it may be possible Facing tax inspections and fines from the tax bureau, and even freezing of platform accounts.