Sep 13, 2024
Shopkeeper tracks Marketplace Facilitator Paid VAT
- What is “Marketplace Facilitator Paid VAT” in Seller Central?
- How does Amazon treat “Marketplace facilitator paid VAT” in Seller Central?
- How does Shopkeeper include “Marketplace facilitator paid VAT” in the profit & loss statements for sellers?
What is “Marketplace Facilitator Paid VAT” in Seller Central?
Marketplace Facilitator Paid VAT (“MFP VAT”) refers to VAT that Amazon collects and remits on behalf of sellers. This concept is typically found in regions like the UK and the EU.
Whereas some VAT may be collected by Amazon but forwarded to the seller who would then remit, in the case of MFP VAT, Amazon remits directly to the VAT authority. In this scenario, the marketplace (Amazon) is obligated to collect VAT from customers on the sale and remit it to the relevant tax authorities. This can be helpful to sellers because sellers do not have the administrative burden and cost of remitting in such a case.
How does Amazon treat “Marketplace facilitator paid VAT” in Seller Central?
In Seller Central, since Amazon will collect and remit, the seller will see both a debit and a credit in financial statements. The net effect on the seller is zero because for every cent in MFP VAT that was collected by Amazon as part of the sale, an equal amount will be remitted by Amazon to the VAT authorities. The financial impact on the seller is neutral. The seller does not receive that MFP VAT amount and does not have to remit it anywhere.
How does Shopkeeper include “Marketplace facilitator paid VAT” in the profit & loss statements for sellers?
Shopkeeper will also make sure that the effect of MFP VAT on your financial statements and profit analysis is zero. Specifically, you will see a line item in the revenue section called “Sales Tax/VATFacilitator Paid” which is a negative amount and reflects the amount of VAT that Amazon is remitting directly and therefore does not get included in your revenue because you never receive it.
In summary, revenue will be unaffected by MFP VAT since the positive amount will be offset by the negative amount. See the following example:
Note the two line items: “Sales Tax/VATCollected” and “Sales Tax/VATFacilitator Paid,” whereby the latter is a negative amount (-46.40) is deducted from the total revenue since the seller never receives that amount and instead it is remitted directly by Amazon to the VAT authorities.
IMPORTANT: While the amounts collected and paid/remitted by Amazon for a particular order often is exactly the same, when you look at your financials in the aggregate across many orders, the two amounts may not always cancel out. Why? Because Sales Tax/VATCollected includes both VAT which Amazon will remit to the authorities as well as VAT which Amazon will forward to you to remit. For some transactions, marketplace facilitator rules may not apply and you may be obligated to remit. In that case, the collected VAT will go to you first, and then you will have to pay it.
