Online trading Amazon is blocking hundreds of Chinese traders
Hannes Munzinger, born in 1988, is an editor for data and investigative research in the development department. He grew up in Ravensburg in Upper Swabia, studied Political Economics in Heidelberg and then journalism on the train between Leipzig, Hamburg, Salzburg and Lucerne. He was part of a team that uncovered the Panama Papers and won the German Reporter Award and the Nannen Prize. Most recently he was involved in the release of Paradise Papers. For his research on Russian black money he received the Newcomer Prize of the Otto Brenner Foundation. In 2017 he was among the “Top 30 to 30” of the medium magazine.
For thousands of Chinese online retailers, access to German customers is via Seattle. There sits the world’s largest retailer Amazon and operates its platform Marketplace. Amazon’s global marketplace connects third-party vendors and buyers from around the world: customers shop as usual on the website of the mail-order company, but the goods come from external dealers. Amazon can then pay the mediation of the shop and shipping.
According to calculations by the Institute for Trade Research in Cologne, the group thus took in 2016 alone in Germany about twelve billion euros. But the lucrative business model is also a gateway for tax evasion.
Research by Süddeutscher Zeitung and WDR revealed in March that at least three thousand Chinese sellers were using the marketplace for business in Germany without having given a tax number. The registration with the tax authorities is obligatory if the goods are sent to the customers within the EU. Sales tax is charged on every sale, and many of the dealers seem to have been able to save that. So they could offer their products – for example, handbags, cheap toasters or charging cables – cheaper than competitors who paid their taxes honestly.
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The officials of the tax office Berlin-Neukölln apparently no longer wanted to watch. The office is responsible for all Chinese companies that want to operate in the German market. So if you want to sell goods from China via Amazon in Germany, you have to register in Neukölln. According to research by WDR and the Süddeutsche Zeitung , so-called requests for information by the Berlin tax investigation led Amazon to exclude more than 500 suspicious Chinese traders from trading via the Amazon Marketplace. Their goods have been quarantined and sellers no longer have access to what is still in the company’s warehouses and distribution centers.
And the pressure of the financial administration shows success elsewhere: The number of registered in Neukölln online retailers from China has more than doubled since May 2017, to today over 1900. Investigators assume, however, that still thousands of traders remain undetected. The responsible Berlin Finance Senator Matthias Kollatz-Ahnen suspects: “We now have maybe ten percent of the work behind us and 90 percent ahead of us.”
Amazon is cooperative
In order to detect further tax evaders, the investigators systematically evaluate the Amazon website and pelt the group with requests for information. Only these requests force Amazon to take the problem seriously. Because if the tax authorities inform the company about suspected backers and they can continue to use the platform, the group could be prosecuted for aiding and abetting tax evasion.
Amazon said on request that the company would “stand up for compliance with tax obligations at all times” and support the sellers with information and training. If the Amazon is notified by German tax authorities that sellers do not comply with their tax obligations, these seller accounts would be blocked immediately. On the other hand, Kollatz-Anhnen considers the group’s approach to be inadequate: “Amazon offers the China dealers an all-round carefree package: Amazon stores the goods, sends them, handles everything, but Amazon does not support the dealers in sales tax not that this is coincidence. “
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