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Amazon Sales Tax Report for Purchases: A Deep Dive

Michael Pignatelli
Last Updated on September 28, 2023

With millions of customers and countless purchases, Amazon has been the go-to platform for eCommerce sellers. No surprise there. Curious about how they deal with taxes? The Amazon sales tax report for purchases is a document that details the taxes levied on Amazon transactions. And these reports do not go unchecked.

In this deep dive, we will unravel the complexities of this report, exploring some of the most important details it should contain. Let’s shed some light on the tax collection process and sales tax rates.

So, what are the details in an Amazon sales tax report? Here are some!

Sales Taxes

A sales tax is a consumption tax levied on goods and services. It is the kind of tax that should be collected from the final consumer of goods and services sold in a marketplace.

Sales tax rates vary depending on a country's sales tax law. There is no national sales tax law in the United States. Hence, there is no uniform rate, and it will depend on the state where you have nexus.

Unless you live in states or provinces that don't charge sales tax, a purchase will be subject to two kinds of sales tax: the state or federal tax rate and the local tax rate of the area to which it was sent. Some goods may be exempt from sales tax. For example, many governments generally exempt sales tax for necessary goods, like food, drinks, or groceries.

Not remitting sales tax or the wrong amount can get your business audited and fined. Therefore, staying on top of your sales tax is extremely important. With that, here are the tax rates for Canada and the US, respectively.

Canada Tax Rates

Canada has three tax types: General Sales Tax (GST), Provincial Sales Tax (PST), and Harmonized Sales Tax (HST). Quebec Sales Tax (QST) is a rate specifically charged for this province, while Retail Sales Tax (RST) is specifically applied in Manitoba. 

Here are the rates for all sales taxes in Canada. You'll see these in the Amazon sales tax report. It pays to know the rates, as not all marketplaces handle sales tax calculation, collection, and remittances. Also, in case Amazon does not cover the other sales tax applied in a province, you’ll know.

ProvinceGSTPSTHSTTotal Tax to Pay
Northwest Territories5%5%
British Columbia5%7%12%
New Brunswick15%15%
Newfoundland and Labrador15%15%
Nova Scotia15%15%
Prince Edward Island15%15%

Source: Sales Tax Rates by Province, https://www.retailcouncil.org/resources/quick-facts/sales-tax-rates-by-province/ 

Sales Tax Rules Depend on the US State

The United States has 50 states, each with its own sales tax rates, rules, and regulations. Unlike Canada, where the package destination is the basis of the sales tax rate (unless stated otherwise), US states have different rules. 

Some states base the rate on the package's source and others on the destination. Hence, aside from the different rates, check whether to apply the rate in the location of your business address or the rate of the state where your customer resides. 

Here are the details of sales tax rates in America:

StateState RateRange of Local Rates
Puerto Rico11.50%0%
California7.25%0% – 3.25%
Mississippi7.00%0% – 1%
Rhode Island7.00%0%
Tennessee7.00%1.5% – 2.75%
Minnesota6.88%0% – 2%
Nevada6.85%0% – 1.525%
New Jersey6.63%0%
Arkansas6.50%0% – 6.125%
Kansas6.50%0% – 5.1%
Washington6.50%0.5% – 4.1%
Connecticut6.35%0% -1%
Illinois6.25%0% – 5.25%
Texas6.25%0% – 2%1.75% local rate for remote sellers, 10-12/19
District of Columbia6.00%0%
Florida6.00%0% – 2.5%
Idaho6.00%0% – 3%
Iowa6.00%0% – 2%
Pennsylvania6.00%0% – 2%
South Carolina6.00%0% – 3%
Vermont6.00%0% – 1%
West Virginia6.00%0% – 1%
Ohio5.75%0 – 2.25%
Arizona5.60%0 – 7.30%
Nebraska5.50%0% – 2.5%
New Mexico5.00%0.125% – 7.75%
North Dakota5.00%0% – 3%
Wisconsin5.00%0% – 1.75%
Utah4.85%1% – 7.5%
North Carolina4.75%2% – 3%
Oklahoma4.50%0% – 7%
Louisiana4.45%0% – 8.5%
Virginia4.30%1% – 2.7%
Missouri4.23%0.5% – 7.763%
South Dakota4.20%0% – 8%
Alabama4.00%0% – 9.0%
Georgia4.00%1% – 5%
Hawaii4.00%0% – 0.5%
New York4.00%0% – 5%
Wyoming4.00%0% – 4%
Colorado2.90%0% – 8.3%
Alaska0.00%0% – 9.5%
New Hampshire0.00%0%


US Range of Local Sales Tax Rates, https://www.salestaxinstitute.com/resources/rates 

US States Sales Tax Rates, https://taxfoundation.org/publications/state-and-local-sales-tax-rates/ 

a woman check an amazon product on a laptop while holding a card

Taxable Products

Knowing which products are taxable and which are not will help you understand sales tax reports. Only tax-levied products show up on these documents.

Most products are taxable; you must charge your customers' sales tax if you sell a taxable item. If you do business in several jurisdictions, especially when selling online, you must charge different sales tax rates depending on the state or province. To do this, you have to establish a sales tax nexus

A sales tax nexus means your business has a “presence” in a particular jurisdiction. This presence subjects your business to that state's prevailing income and sales tax rules. For instance, if you sell products that need to be stored or shipped to a particular California, you must establish a nexus in that area and collect sales tax too.

Another way to establish a sales tax nexus is through intercompany transactions. For example, if you sell goods used by another company and delivered on behalf of its customers, you may be required to file taxes in that company's jurisdiction.

On the other hand, if you sell digital goods like music downloads, software subscriptions, or other intangible property, you don't need to report these transactions because they do not require storage space and physical delivery. 

Tax Exemption

Aside from not having a nexus, another reason why some items won't be charged with sales taxes is because they are tax-exempt. No sales tax amount will be attributed to these purchases in the report.

Amazon has the Tax-Exempt Program that exempts individuals and groups from paying sales tax. To enjoy this benefit, your customers must submit complete tax information and documents on the Amazon platform. 

Canada's Tax-Exempt Groups and Individuals

In Canada, there are three basic instances when buyers can be tax-exempt:

  1. Business Income Below $30,000: Buyers can show that their worldwide business sales do not reach $30,000.
  2. Seller of Essential Goods: Almost all products sold on Amazon are taxable, except essentials and groceries. If Canadian law classifies goods as tax-exempt, buyers shouldn’t be charged sales tax.
  3. Special Groups: Canadian government employees, members of indigenous groups, diplomats, and other groups and individuals classified by Canada as tax-exempt should be absolved from paying taxes.

US Tax-Exemptions

Like in Canada, there are also tax-exempt individuals and groups in the US: 

These clients must upload a tax-exempt certificate and other necessary documents to Amazon. Then, Amazon processes the documents through the platform’s Tax-Exempt Program.

Frequently Asked Questions on Sales Taxes

After knowing the details in an Amazon sales tax report, let's check out some of your questions as a newbie seller. After going through these, you'll be ready to view your sales tax report and understand who's in charge and what happens during its calculation, collection, and remittance.

Does Amazon Collect Sales Tax?

Yes, because of the Marketplace Facilitator (MPF) Law, which is unique to each state. This law cites that third-party sellers like Amazon should handle the collection, filing, and remittance of sales taxes. 

Customers pay a one-time sales tax whenever they buy products and services on Amazon. The buyer will pay the sales tax for the purchased goods and services, and Amazon will only collect, calculate, and remit the sales tax. 

The sales tax collection services provided by Amazon as a marketplace facilitator are free. The process is streamlined and requires minimal participation and input from the sellers—making it efficient for business.

There was a time when this law didn't cover Canada. Thankfully, MPF now applies to the country. Unless otherwise declared by specific provinces, Amazon will handle the collection, filing, and remittance of the sales taxes charged to your customers. All you have to do is track and ensure accuracy.

a printed law act with a stamp, a gavel, sound blocker, a weighing scale, and some law books

What Are the Steps to File and Remit Sales Tax?

There are three main steps in filing taxes: 

  • securing a sales permit, 
  • collecting sales tax, 
  • and remitting the sales tax. 

Let's check the steps one by one.

Secure Sales Tax Permit

Before you can collect sales tax, you have to secure a permit. Without a permit, sales tax collection is illegal. You can find forms on your local revenue website and register your business.

Once you complete your registration, the tax collection agency will give your filing frequency. It can be monthly, quarterly, or annually, depending on your business's sales volume in a certain period.

Sales Tax Collection

After securing the permit, you can now legally collect sales tax. Amazon has a tax collection system that will handle collection for you once you input the correct settings. Tax charges may depend on whether the product sales are origin-based or destination-based.

Origin-based tax calculations mean that you follow the tax rate of where your business is located. 

In comparison, destination-based calculations will consider the tax rate of where your products go, regardless of location.

Filing Sales Tax

Tax collection authorities will usually ask for sales tax reports and other business statements when you file for sales tax returns. You can easily find different reports in your Amazon Seller Central account. If you want comprehensive reports, you use accounting software to generate more detailed ones for your business. In addition, make sure that all the data in your tax returns are valid to avoid any issues and penalties.

How to Generate a Sales Tax Calculation Report?

Amazon sales tax reports are useful in helping sellers provide transparency to their customers. Although sales taxes are already handled on Amazon, they aren't the same as other platforms, so you must run them independently. 

If you are wondering where to get such reports, you can do it through Amazon Seller Central Account Settings. To download any Amazon sales tax report, follow these steps:

  1. Log in to Amazon Seller Central and navigate to Reports.
  2. Then, click the Tax Documentary Library to see the sales tax report.
  1. Next, you should generate a tax report by selecting a report type. You can develop two sales tax reports on Amazon: the Sales Tax Calculation Report and the Marketplace Tax Collection Report. The Sales Tax Calculation Report is useful if you must collect and remit sales tax and any associated sales tax liabilities. On the other hand, the Marketplace Tax Collection Report documents sales tax collected and sent by Amazon on behalf of sellers. 
  1. When selecting a report type, a pop-up window will appear where you can customize the time range for the data you want to see in your report. 

Make Sense of an Amazon Sales Tax Report for Purchases With Unloop

The Amazon sales tax report is a great way to help you stay compliant with relevant tax laws. You should also generate this report if you are responsible for collecting sales taxes, especially outside Amazon.

Are you still confused about sales taxes? Outsourcing tax support helps simplify running your ecommerce business.

Whatever ecommerce platform you use, adopting industry-specific tax and accounting methods is critical to achieving your business objectives. With the right accounting service, you can grasp these numbers and make more informed business decisions.

Unloop can be your partner as you grow your ecommerce business. Our team of experts can provide you with a wide range of services, from accounting to automating your sales tax collection and other important financial tasks. 

Book a call with us, and we'll help you get started.

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About unloop

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