UK's Healey to make online marketplaces collect tax from sellers

LONDON, Oct 28 (Reuters) - British finance minister John Healey said on Wednesday he would make online marketplaces responsible for collecting value added tax (VAT) owed by retailers selling on their platforms.

"I will strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online," Healey said in his budget speech to parliament.

The change means that online marketplaces, such as Amazon, eBay, Temu, Shein and Alibaba, will become responsible for collecting the VAT which is charged on sales by sellers on their sites.

The finance ministry said the change, to be implemented from October 2027, is designed to tackle VAT evasion and support competition by helping ensure businesses that pay the tax they owe are not undercut by those that do not.

The rules will apply to UK businesses that are VAT registered or make sales of more than £90,000 ($120,000) on an individual online marketplace.

Healey said revenue raised would help fund business rate cuts for physical stores.

($1 = 0.7527 pounds)

(Reporting by David Milliken and James Davey; Editing by Toby Chopra)