Does Amazon FBA need to pay taxes? Detailed answer

When merchants do business, they will be involved in tax issues. Amazon needs to pay taxes, and in certain cases, it may also need to pay taxes at the same time. Of course, all taxes are written as exempt. So does Amazon FBA need to pay taxes?

The platform does not add fees, however, some states consider fees such as per-item, order, and referral fees taxable services. Similarly, inventory preparation fees such as bubble wrap, plastic bags, tape, and labels are also considered taxable in some states. Start charging some of these fees and collecting taxes to comply with tax laws.

The platform does not want to collect taxes from sellers, but the state government believes that it should be responsible for sales expenses. This move is just a compromise to comply with state tax laws. Whether all sellers will agree with Amazon's explanation for collecting taxes is a matter of opinion.

The location of the business determines the fees to which the tax applies, and the location where the performance of the services is performed determines whether the tax is applied to the FBA inventory preparation fees. US taxes are usually between 4% and 10%, and state tax rules may change frequently. If states modify their laws, the information will also be adjusted accordingly with the state tax rules.

In terms of inventory usage fees:

Fab prep services in Arizona, Connecticut, Erie or West Virginia are taxed based on each state's tax. Stock usage charges include labeling, multi-bagging, bubble wrap, taping and opaque bagging.

Similarly, if you happen to be located in these states, you will need to pay for the FBA fees. An example is also listed here.

If you decide to use an FBA prep service to bubble your items, and that service is performed for delivery in Arizona, and the tax rate for that location is 8.37%, and the bubble wrap fee is $0.80/unit, a tax of $0.07 will be collected and remitted to comply with state law (calculated as 8.37% of the bubble wrap fee of $0.80/unit).

Therefore, everyone just needs to pay taxes according to the tax rate given by the local state.

Therefore, not all US sites need to pay taxes. This depends entirely on the tax regulations of the state where they are located. The platform only complies with the regulations and informs the merchants. Therefore, if the merchants are in the above states, they need to pay taxes. If there are no mandatory regulations in other states, then they do not need to pay.

In general, whether Amazon FBA requires tax payment depends on the specific policies of the local site. For example, in the US site, some states require tax payment, while others do not.