"Luxembourg has this low VAT level to make publishing more accessible - and although Amazon is exploiting this, it is not passing it on to the industry."
Amazon said: "Our goal is to make it easy for readers to discover and read the books they love by expanding access to millions of books in both digital and print.
"We've been able to do this by focusing on innovation, as exemplified by Kindle, and by offering customers the widest selection at the best possible prices and service."
A publisher, who refused to be named said: "These are not pleasant people to do business with," one senior publishing executive said. "They have no compunction in shutting down the buy button on their site on our titles if we step out of line," a practice that can be carried out in seconds.
Amazon holds huge power in the digital publishing market, selling nine out of ten ebooks in the UK.
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