The report estimates that close to $2bn has been lost from third-party sellers on online marketplaces not charging the tax on sales they make in the UK.
Amazon and eBay said they were working with HMRC on the issue.
Labor MP Meg Hillier, the committee chair, called online VAT fraud “hugely damaging” for British businesses and taxpayers.
The reason for the fraud increase is the selling of foreign goods to UK shoppers – usually via online marketplaces like Amazon and eBay that are keeping some of their stock in UK warehouses to provide next day delivery.
The report’s conclusions include:
1- The UK’s tax agency should set up an agreement with online marketplaces by March of next year.
2- The website should require non-EU sellers, which dispatch goods already in the UK to provide a valid VAT number.
3- HMRC should inject more urgency by making more extensive use of its existing powers.
Amazon in a statement said, it was reviewing the report and supported efforts to ensure sellers across all marketplaces were VAT compliant. But an eBay spokesperson said it was going above and beyond HMRC’s requirements to provide a “fair marketplace for all our buyers and sellers”.
Later on this will be an issue all around the world with online mark.
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