Amazon defends UK tax payments again after paying £492m during its most profitable year in history

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Amazon paid £18.3 million in corporation tax in the UK in 2020 after experiencing its highest sales in history, once again forcing it to defend its controversial tax structure.

Amazon’s UK arm reported total group revenues of £20.63 billion last year, more than 50 per cent more than the £13.73 billion it made before the pandemic in 2019.

The tech giant says that its tax bill reflected this historic surge in sales, seeing the total amount of “direct taxes” paid to the UK jump from £292 million in 2019 to £492 last year.

While it didn’t provide a blow-by-blow breakdown of its direct tax bill, but at least half of it is thought to be accounted for by national insurance and business rates, with the rest going towards stamp duty and corporation tax.

Aside from its core retail arm Amazon UK Service, which provides warehousing and logistics solutions to its sellers, paid taxes of £18.3 million after seeing pre-tax profits rise 25 per cent to £128 million on revenues of £4.85 billion.

Amazon, which now employs 55,000 people in the UK, said that it invested £1.1 billion in the UK last year largely through “indirect taxation”.

Throughout 2020, Amazon also invested in nearly a dozen on-site solar panel schemes and a 350MW windfarm in Scotland.

READ MORE: Amazon could avoid “historic” G7 tax hikes thanks to glaring loophole

The retailer has repeatedly drawn criticism for the amount of tax it pays in the UK and elsewhere, but international authorities have so far been unable to do much about it.

Amazon runs its retail business at razor-thin margins and reinvests the majority of its profits, a technique which allows it to pay relatively little in corporation tax.

According to corporate filings in Luxembourg, where Amazon’s EU headquarters is situated, the retailer raked in a whopping €44 billion (£38 billion) across its European markets last year.

Despite this Amazon’s Luxembourg unit, which handles the sales for the UK, Germany, France, Italy, Spain, Sweden and the Netherlands, made a loss of €1.2 billion (£1.04 billion) meaning it paid zero corporation tax in the country.

Head of the Fair Tax Mark campaign group Paul Monaghan told The Guardian: “Much of their UK income continues to be shunted to Luxembourg, where there is a ‘loss-making’ subsidiary that is not only not paying tax, but is generating enormous tax reliefs that can be used in the future to ensure that little or no tax continues to be paid.

“Amazon is growing its market domination across the globe on the back of income that is largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach.”

Amazon said: “We are proud of the significant economic contribution we are making to the UK economy.

“Looking ahead, we know that the UK remains full of opportunity and we continue to be excited by the potential to continue to invest, create jobs, develop talent and have a positive impact in communities across the country.”

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1 Comment. Leave new

  • If they are reinvesting their profit to grow their business, this is entirely legitimate, and other businesses have an equal opportunity to adopt this business growth strategy.

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