Understanding Tax Fees on MarketGap

Q: What is a Tax Fee?

A: A tax fee on MarketGap refers to the taxes applied to orders. This fee is deducted from the list price of your products. It's important to note that tax fees are only relevant in marketplaces where the sales tax (or equivalent) is included in the list price of items.

 

Q: Where Do Tax Fees Apply?

A: Tax fees are typically applied in the EU Marketplaces and on Amazon.com.au. In these regions, the Value-Added Tax (VAT) or equivalent is included in the list price of items. Be aware that other marketplaces might also deduct taxes from the listing price. We advise conducting thorough research for each marketplace to understand their specific tax requirements.
In other regions where Amazon adds the VAT on top of the list price, you may leave the tax fee at 0 since Amazon will add the VAT on top of the list price.

Q: Tax Fee Calculation

A: In the EU and similar marketplaces, unlike in the US and Canada, taxes are not added on top of the list price but are included within it. For example, if you're selling a product on Amazon.com for $100, the equivalent list price on Amazon.co.uk, assuming a 20% VAT, would be around $120. This inclusion of tax in the list price is crucial for competitive pricing analysis in these marketplaces.

MarketGap and Amazon approach tax calculations differently, especially in the context of a 20% tax. For example, if you have a product with a base price of $100 before taxes and a 20% tax rate:

• On MarketGap, the tax is calculated based on the list price, which must include the tax. To achieve a final sale price of $100 after a 20% tax, you would list the product for $125. This is because 20% of $125 is $25, which, when deducted, leaves a sale price of $100.
• On Amazon (EU and similar Marketplaces where), the list price already includes the 20% VAT. So, you would list the product for $120. Here, $20 (which is 20% of $100) is the VAT included in the $120 list price, resulting in a net sale price of $100 after deducting VAT.

To accurately calculate the tax fee in MarketGap, where the tax is based on the list price, you'll need to adjust the standard tax percentage. To reflect the change, Use the formula =100 - (100 / (VAT + 1)) in Excel or in a calculator where VAT is your desired tax fee; use 20% as 0.20.
Example where the desired tax fee is 20%:
100 - (100 / (0.2 + 1)) = 16.66667% = Converted 20%.

The formula recalculates the VAT rate to reflect the fact that the tax is a portion of the total list price (including VAT) rather than just the base price.
This conversion ensures that when you set a list price on MarketGap, the final amount after including VAT aligns with your intended price point.

 

Exceptions to Note

• In marketplaces where sales tax is added to the list price (like in the US), you do not need to include it in the tax fee on MarketGap, as Amazon will automatically add it.
• If you are tax-exempt in the country where you are selling, or if Amazon is not collecting taxes on your store but you are still responsible for taxes or duties, you can include these fees in MarketGap.
• Always ensure you are up-to-date with tax regulations in each marketplace to stay compliant and accurate in your pricing.

Please be aware that the information provided here is for informational purposes only and may be out of date. MarketGap makes every effort to provide accurate and current information, but tax laws and regulations can change frequently and vary between jurisdictions.

Disclaimer of Responsibility:

MarketGap is not responsible for any losses or damages incurred due to tax-related issues.
Users are solely responsible for conducting their own research and ensuring compliance with all applicable tax laws and regulations in their respective markets.
We strongly recommend consulting with a tax professional or conducting thorough research to stay informed about the latest tax requirements and how they might affect your listings on MarketGap and other marketplaces.