Amazon is a huge player in the retail and e-commerce industries. It has expanded its retail network all over the world and even has a very popular cloud service. However, the electronic retail giant may soon lose one of its key advantages over its conventional competitors. As of 1st April 2017 Amazon will collect sales tax nationwide, at least in all states that require a sales tax.
The issue, as was in some states, was that local businesses are at a loss when they pay sales tax and online vendors, such as Amazon, do not.
Many states consider this to be a step in the right direction as this will bring Amazon at the same level, in terms of tax payments, as smaller local businesses. The sales tax issue first became a problem for Amazon when it started to develop a physical presence at the state level by opening fulfillment and data centers in a bid to try and improve delivery times and have a more robust physical network.
While in some states Amazon made deals with state governments to arrange for tax collection on online purchases, by having a physical presence in a state it was liable to sales tax. The company has fought against this over the years, but now marks the end of them.
Amazon had to collect sales tax from 39 states as of 1st March 2017 but in a report from CNBC, from 1st April onwards it will collect tax from in the states of Hawaii, Idaho, Maine and New Mexico.
And to make matters worse for Amazon and its buyers, even if it does not have a physical presence in a particular state, buyers will still have to pay a use tax for using the service. Now Amazon is finally on a level playing field with the brick-and-mortar retailers that make up part of its competition, though it isn’t likely that it will be derailed anytime soon.