Overview

Amazon's Marketplace Withheld Tax (MWT) refers to the taxes that Amazon is legally required to calculate, collect, and remit on behalf of sellers in certain jurisdictions. Under marketplace facilitator laws enacted across dozens of countries, states, and localities, Amazon assumes the responsibility of collecting applicable sales tax, goods and services tax (GST), or value added tax (VAT) from buyers and remitting those amounts directly to the appropriate government authorities. For sellers, this means specific tax amounts are automatically deducted from order proceeds — and understanding how this works is essential for accurate bookkeeping and compliance.

Key Points / What Sellers Need to Know

• Automatic collection is mandatory — All sellers on Amazon marketplaces must agree to automatic marketplace withheld tax collection, regardless of their business location, where their products originate, or how much they sell.
• Applies across all Amazon marketplaces — MWT collection covers all products from all sellers on every Amazon marketplace where applicable tax laws have been enacted.
• Multiple tax types are covered — The program encompasses national, state, and local sales or use taxes, goods and services taxes (GST), and value added taxes (VAT), depending on the destination jurisdiction of the order.
• Deductions appear in order reporting — The tax amounts Amazon collects are reflected in your order details and financial reports as deductions, using specific reporting identifiers for each marketplace and tax type.
• Sellers may still owe additional tax — If the amount Amazon withholds and remits is less than the total tax owed on a transaction, the seller remains responsible for remitting the difference to the relevant tax authority.
• Amazon does not file taxes for sellers — While Amazon collects and remits marketplace withheld taxes, it does not report or file tax returns on behalf of any seller. Sellers must handle their own tax reporting obligations.

How Marketplace Withheld Tax Works

When a buyer places an order on Amazon, the platform evaluates the shipping destination to determine whether marketplace facilitator tax laws apply. If the order is headed to a jurisdiction — whether a country, state, county, city, or district — where such laws have been enacted, Amazon automatically calculates the applicable tax and adds it to the buyer's total at checkout. The buyer pays this tax as part of their order, and Amazon collects the full amount. The collected tax is then deducted from the seller's proceeds and remitted by Amazon directly to the relevant government authority. Sellers can track these deductions through their order details and financial reporting tools within Seller Central, where each deduction is tagged with a reporting identifier that corresponds to the specific tax type and jurisdiction.