Google, Amazon Pass On UK Digital Services Tax By Hiking Ad Prices, Fees At Same Rate The Government Takes

Google and Amazon will increase the prices they charge advertisers and sellers to reflect new digital services taxes being levied in the UK, Austria and Turkey.

A letter sent to advertisers by Google overnight and sighted by The Register opens: “On November 1, 2020, Google will begin charging new fees for ads served in the United Kingdom, Turkey, and Austria.”

The extra fees in the UK and Austria are styled a “DST Fee” – and a Google explainer titled “Country-specific fees” explains the acronym by saying “The fee is driven by the new digital services tax in that country.” Said tax came into effect on April 1st, 2020, and is levied at a rate of 2 per cent.

Which is the exact amount of a new fee Google says will appear on advertisers’ invoices come November 1st (for ads served in the UK).

The new regime also passes on Austria’s 5 per cent digital services tax.

In Turkey things are more complex because while the nation’s digital services tax is 7.5 per cent it is calculated on gross revenue across a certain period with allowances for exchange rates. Google says its 5 per cent charge in Turkey reflects “significant increases in complexity and cost of complying with regulations”.

Google says the fees will be charged over and above the cost of ads, so organisations that set budget ceilings with its ad services will see their bills bumped by 2 per cent. The fees may even be charged after the balance of a Google advertising account is depleted. If that happens, Google will thoughtfully deduct fees owed from advertisers’ next payments.

And you’ll probably end up paying, too, because advertisers build the cost of ads into the prices they charge for their goods and services. Now that the cost to advertise beer, bread, bacon and any other commodity on Google just rose, brands will surely pass on their extra costs rather than wear the pain on their own bottom line. Just as Google has chosen to do.

Meanwhile a letter sent to Amazon sellers at the weekend stated:

“As we announced on 4 August 2020, the UK government passed legislation to introduce a 2% Digital Services Tax, which will impact fee rates on Amazon UK. Therefore, starting 1 September 2020, we will be increasing referral fees, Fulfilment by Amazon (FBA) fees, and monthly FBA storage fees by 2% for items sold in the UK. Additionally, starting 15 September 2020, Multi-Channel Fulfilment (MCF) fees will increase by 2% for items sold in the UK.”

Again, we'd expect buyers will see that pain handed on. ®