Originally Posted by DrNefario
I had seen a tweet about that article but, reading it just now it sounds like utter garbage. Of course Amazon are excluding the VAT from their cost prices, why would anyone not do that? Why on earth would they allow the publishers to charge them more because they are paying a lower rate of VAT? It's only agency pricing that stops them passing on any of that cost saving to the consumer.
They aren't "pocketing the VAT" - I imagine that would be massively illegal - they are simply making more profit by avoiding the UK rate, which was surely the point of the whole Luxembourg scheme. I might find that objectionable, but I don't see any new information here.
It seems like a bit of corporate mud-slinging, to me.
To me it seems like they are saying to the publishers that they need to have the same price (including VAT) for paper book and ebook. But since the ebook VAT is 20% they are demanding greater rebate from the publisher to cover that. And if they are doing that and then only paying 3% VAT then it looks like pretty bad behaviour.