Preposterous Amazon FBA accounting puzzle. How do we account for this?
I wonder if anyone can help me resolve how to deal with the latest astonishing Amazon accounting creation? My comments are in square brackets.
FBA Order dated 4/6/20 on Amazon UK shows the following was charged to the customer:
Item subtotal: £54.09 with included VAT £9.02 [so pre-VAT: 45.07]
Gift wrap: £2.99 with included VAT £0.50 [so pre-VAT: 2.49]
Item total: £57.08 with included VAT £9.52 [so pre-VAT: 47.56]
Accounting between Amazon and us from Amazon’s website
Product charges
Replica Royal Game of Ur Qty: 1 £45.07
Promo rebates
Replica Royal Game of Ur Qty: 1 £0.00
Other
Gift Wrap Tax: £0.50
Gift wrap: £2.49
Product Tax: £9.02
Sales Proceeds £57.08
Amazon fees
Sales Commission: -£8.11 [ 15% of £54.09 - the total amount paid including VAT for the item only ]
FBA fulfilment fee per unit: -£2.17
Gift wrap chargeback: -£2.49 [ Amazon take back the £2.49 for gift wrapping because this was their service, not ours. However, it appears that they do not take back the VAT on the gift wrapping! ]
Change to your seller account balance £44.31
My conclusion from this is that Amazon keep the £2.49 that they charge for gift wrapping but pass the VAT to us? Do you concur? Is that even legal?
Anyway, Amazon then pass the information for the order into our system with a callback as follows
Price 45.07 Tax 9.02
GiftWrapPrice 2.99 GiftWrapTax 0.50 [seems they are inconsistent here and the giftwrap amount includes VAT!]
TotalInvoiceAmount 48.06
Until now, our system has now taken it that the TotalInvoiceAmount value is the total before VAT. Now the system will not accept this value and produces an error because the prevat amounts do not add up to the TotalInvoiceAmount figure.
Amazon’s calculation is total 48.06 = Item price 45.07 + giftwrap price including VAT 2.99
Or put another way total 48.06 = pre-VAT amount: 47.56 + giftwrap VAT: 0.50.
So their TotalInvoiceAmount figure appears to be neither the amount including all VAT nor the amount before VAT! Do you concur?
Leaving aside the fact that it’s causing our system to fail and we somehow need to change the system to cope, how do I even account for this?
8 replies
Seller_mBENc0rmDmw5W
You must admit it is clever. Charging fees on VAT, then making you pay the VAT for the gift wrapping service 
The Amazon % fees should only be based the item total, before VAT surely?
Seller_Rkf2znCXtSZpI
FBA orders may qualify for free shipping according to the Amazon shipping rules. In these cases, we do not charge shipping fees to the customer and, in turn, we neither remit to nor debit shipping fees from your Amazon seller account.
If, however, a customer is charged for shipping and/or gift wrap services, this revenue is part of your sales transaction and remitted with the amount of the item price revenue to your Amazon seller account. These revenues are featured as Shipping and Giftwrap in the settlement report and transaction details. The total value of the sales transaction is the item price plus shipping and/or gift wrap revenue paid by the buyer. You are responsible to account for any applicable VAT on the total value and, in the event that you issue a VAT invoice to the buyer, you are required to include the amount the buyer paid for shipping and/or gift wrap. In this detail, Fulfilment by Amazon transactions are no different from sales transactions related to products you fulfil yourself and where the buyer is also charged for shipping and/or gift wrap. To identify all revenues between the seller and the buyer, access the Shipment report from the Order Reports link on the Amazon Fulfilment Reports page.
After remitting any shipping and gift wrap revenue into your Amazon Seller Account, we will charge you a fee equal to the amount of any shipping and/or gift wrap fee charged to the buyer. Such transactions are called Shipping Chargeback or Giftwrap Chargeback in the Settlement report. In some cases, the Shipping or Giftwrap Chargeback might be lower than the amounts that were remitted to your Amazon Seller Account; however, this does not impact the amount paid for shipping and/or giftwrap by the buyer, which should be included on your VAT invoice to the customer.
Seller_W6IbwSPxN8QUm
Which system are you using to account for your transactions? It seems a ball ache whatever it is.
Amazon give you the VAT to pay so you are not at a loss.
Like shipping and storage it is as if you subcontract the gift-wrapping service to Amazon, who charge £2.99. As it is your sale, you pay the VAT on the whole transaction and they charge an expense to your account for the gift-wrap net of VAT. You then hold the VAT amount for the whole transaction which includes the 50p for the gift wrap and whatever the amount is for the item itself.
It’s the same for shipping. If they charge additional shipping they leave you the VAT for that.
Seller_W6IbwSPxN8QUm
Good morning,
Yes, the way to look at it is that you make the entire sale and pay VAT accordingly and expense Amazon’s fees inline with what they deduct from you.
Any additional service the customer pays for will be treated the same way. Especially postage, i.e., if you are FBA and a non-prime customer pays a delivery fee, Amazon will leave you the VAT for the postage element.
Seller_iLJMOkYKDIy7x
Thanks. I don’t think this explains though, why the TotalInvoiceAmount includes the VAT on FBA carriage/giftwrap. Normal Amazon UK transactions do not include tax in the TotalInvoiceAmount passed back and nor do they for any other Amazon country as far as I’ve seen.
So fine - this field is poorly named but must mean Total PreTax Invoice Amount.
But now it seems this amount includes VAT on FBA carriage/giftwrap but not any other VAT. Surely a mistake on Amazon’s part?
Seller_iLJMOkYKDIy7x
I’ve checked an order 203-3383950-0565131 that has FBA carriage but not gift wrap. The carriage without VAT is charged back as you say. But the VAT on carriage is not included in the value that is passed back in field TotalInvoiceAmount.
By contrast, in the order that I opened this case about 206-7279297-5541113, with gift wrap but zero carriage, the gift wrap VAT is included in the value that is passed back in the field TotalInvoiceAmount.
This is inconsistent. To me it still looks like an mistake in Amazon’s system.
