Tesco demands 1% “Amazon tax” on online sales as government faces increasing pressure

Tesco has become the latest major retailer to demand an “Amazon tax” be imposed across the UK to level the playing field between physical and online players.

The chief executives of 18 companies, including Tesco, Morrisons, Asda, Waterstones and other retail property owners, wrote to chancellor Rishi Sunak to call for a fundamental overhaul of how retailers are taxed in the UK.

The group of signatories called on Sunak to ease the business rates tax burden on physical retailers, especially those with large store estates like supermarkets, in the upcoming budget next month.

Separately, Tesco’s chief executive Ken Murphy pushed for a one per cent levy on online sales, a move which could drastically alter the UK’s retail landscape.

It comes after a report emerged last week that Amazon paid just £71 million in business rates on its entire UK estate including fulfilment centres, research and development centres, corporate offices in London, Amazon Lockers, Whole Foods Market stores, and delivery stations.

According to real estate advisor Altus Group, who conducted the research, this represented a tax to turnover ratio of just 0.37 per cent.

On average, UK bricks-and-mortar retailers paid around 2.3 per cent of their annual retail sales in business rates, according to the Centre for Retail Research.

READ MORE: Government reported to be working on “excessive profits tax” for online giants after Covid-19 windfall

Business rates have been on hold for months in a bid to help retailers survive the pandemic, but these are due to come back into force in April.

The group warned that returning to the old system, “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.

Aside from business rates reforms, The Sunday Times reported over the weekend that the government is working on proposals for an “excessive profits tax” for companies that experienced a surge in profits due to the pandemic.

According to leaked emails, the Downing Street policy unit is working on a one-off Covid windfall tax to be applied to firms who saw their business boom since national lockdowns in the UK began in March 2020.

Officials at the Treasury are also believed to be meeting tech firms and retailers this month to discuss how an online sales tax would work.

Neither tax rise is expected to be introduced in March, but senior government sources speaking to The Sunday Times said the increases could form a centrepiece of efforts to cut Britain’s debts in the autumn.

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3 Comments. Leave new

  • Avatar
    Malcolm Glass
    February 8, 2021 9:59 am

    Whilst I agree with the imposition of a tax on on-line traders, 1% is not enough. The damage done to the High Street and the additional cost to the environment from often excessive packaging not forgetting the Co2 from thousands of vans warrants a higher figure. This should be offset by a review of business rates which are driving small retailers off the High Street. As for the likes of Tesco, Morrison etc, they chose to build unnecessarily massive stores so can’t really be whingeing about the resultant operating costs and taxes.

    Reply
    • I agree on a tax increase. Unfortunately the way Amazon operates is complex. And any tax increase will likely be passed down to a lot of self employed and small businesses.

      If you look at the van drivers, many of them are self employed and any emissions based tax imposed will likely be passed on to them.

      If you look at Tax on turnover, in regards to online sales they act as a market place where thousands of vendors sell their products through Amazon. Any increase in Tax applied here will simply be passed down in fees to the vendors rather than Amazon themselves. Amazon already charge high fees to these vendors.

      The tax needs to be applied to Amazon’s UK profits and not compared to turnover.

      Reply
  • it s complete bs. just because a company like amazon set up online and does do better then for example a tescos ( as they(tescos) dint go with the times) doesn’t mean that they should have a say. and shops like tescos ar profiting over the backs of people during the pandemic anyway, ow and lets not talk about the under paying they do to there personal.

    Reply

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