Amazon could avoid UK tax for another two years

Amazon could avoid tax in the UK for a further two years after reliefs brought in by Rishi Sunak during the pandemic have continued to benefit the ecommerce giant.

A report from the Fair Tax Foundation indicates that Amazon claimed over £800 million in capital allowances, which are business expenses that can be offset against profits, last year. This figure was £500 million more than in 2020.

Current prime ministerial candidate Rishi Sunak also brought in a “super-deduction” scheme for businesses that invest in infrastructure, which Amazon benefitted from.

According to the scheme, from 1 April 2021 through to 31 March next year, companies are able to claim for allowances equivalent to 30% more than the value of investment in new plant and machinery technology, and up to half the value of further investments in tech that forms parts of buildings, for example air conditioning.

This meant that Amazon received a £75 million discount on its tax bill for the year to December 2021, the foundation has claimed.

READ MORE: No tax please, we’re (not) British: How the ‘Silicon Six’ avoid paying tax

As a result, Amazon had no tax to pay in 2021.

The company has reportedly already set aside almost £66 million against its tax bill for next year based on an estimated £250m of trading losses from 2021.

If it spends a similar amount of funds on warehouse tech this year, this number will rise again, meaning the company would need to make profits of over £600 million in the UK before it has to pay corporation tax either this year or in 2023.

Amazon has claimed it invested more on its warehouse and logistics last year as a result of expanding its operation due to logistical difficulties brought in by the pandemic.

It invested more than £2.3 billion in infrastructure last year as it opened five new warehouses in Swindon, Dartford, Gateshead, Hinckley and Doncaster, three of which were kitted out with its latest robotics technology.

It also continued to build and operate datacentres in the UK for its cloud division, AWS.

“Even before the super-deductions, Amazon paid little corporation tax in the UK, in part because the bulk of their UK income is still booked in Luxembourg,” Fair Tax Foundation chief executive Paul Monaghan told The Guardian.

“However, we now have a situation where Amazon UK Services are not only not paying tax, but they are being handed huge tax credits for investment that almost certainly would have happened anyway. This will ensure that tax payments are not only wiped out last year, but this year and future years as well.”

An Amazon spokesperson responded to the story by saying: “The Government uses the taxation system to actively encourage companies to make investments in infrastructure and job creation.

“These capital allowances are available to all eligible UK companies. Last year, we invested more than £11.4bn in the UK, building four new fulfilment centres and creating more than 25,000 jobs. Our total tax contribution increased to £2.77 billion – £648 million in direct taxes and £2.13 billion in indirect taxes – as we have continued to grow and invest right across the UK.”

 

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