Amazon’s substantial tax avoidance in the UK

Amazon has had a good year in the UK with income up by around 13%. Profit margins have also been rising. If we apply its latest average profit margin globally (which it discloses) to declared UK income, we can estimate that its UK profits could have been be an eye-watering £2.9 billion in 2024.

Being as Amazon does not disclose the amount (if any) of corporation tax actually paid in the UK, and the UK corporation tax rate is 25%, we think the loss to the exchequer could be as big as £575 million.

Tax raises for the public 

Over the last five years, the combined potential loss of tax revenue from Amazon alone comes to nearly £2bn – an equivalent sum to some of the new taxes proposed recently to help fill the UK’s fiscal black hole.

Tax avoidance of this magnitude can be directly linked to the failing public services in this country. It also contributes to the worsening inequalities in society – with Amazon’s owners and shareholders continuing to distance themselves financially from everybody else. These two factors have also been linked to the rise of far right political parties.

It is thanks to the kind of pressure that campaigns like ours have been able to create, that Amazon now feels the need to publish long statements praising itself for the taxes that it does pay (i.e. the ones that are harder to avoid like VAT). 

Despite these statements, its failure to disclose consolidated profits and corporation taxes paid in the UK (unlike most other businesses trading here), means that informed commentators like the Fair Tax Foundation remain unconvinced.

What can £575 million be used for?

Based on our calculations, we estimate Amazon will avoid paying around £575 million in corporate tax for 2024.

This money could be used for vital public services in the UK. This includes recruiting staff or funding vital schemes for the public good.

As the infographic above shows, £575 million is a lot of money which could be used for social good in the UK. For example:

£575 million could be used to pay for:

• 23,504 nurses on their starting salary, OR
• 14,808 resident doctors on their starting salary, OR
• 17,012 new teachers on their average salary

Or £575 million could pay for:

• 1,916,667 additional winter fuel payments of £300 this year, OR
• 485,007 weeks of residential nursing adult social care at ,000 each, OR
• 2,002 mid spec new social homes 
   

How much corporate tax does Amazon pay?

Estimating the total amount of corporation tax that Amazon has actually paid is difficult because it is not very transparent about its finances – only disclosing the minimum required by law in each country it trades in. 

In previous years, reports in the Guardian and elsewhere have suggested a figure which we have used in the table below. This has not happened for the year under review here.

(Sources for the figures are at the end of the article.)

TOTAL amount of corporation tax 2020-2024:: £1,990m. This is nearly £2 billion.

How much corporation tax do other companies pay?

Other UK wholesale and retail businesses paid £8.9bn in corporation tax between them in 2023/24. 

Amazon has now grown to be the biggest UK retailer by sales, and its likely contribution could be less that 1% of this amount.

Why Amazon's tax avoidance matters

We think there are two reasons why Amazon's tax avoidance is important. 

1. The UK government needs revenue to rebuild public services

In 2024 UK voters dramatically rejected any further hollowing out of public services. The new government needs new sources of revenue to help rebuild the NHS, schools and other public services. (Remember the £22bn black hole?)

Tax from corporations like Amazon is one form of income for the government to use for public services. 

2. Amazon is increasingly replacing existing retailers who were paying tax

Amazon has been talking publicly about how much it invests in the UK and is 'contributing to the UK economy'. 

And you can't drive down a motorway these days without seeing another giant Amazon fulfilment centre popping up somewhere.

The trouble with Amazon's argument is that, for each of these new Amazon warehouses, 100 shops will have closed down somewhere else – likely on a high street near you. 

It’s not that people are buying more TVs, shirts or hand blenders – it's just that they are buying them from Amazon instead of the retailers on the high street. 

Amazon's 'tax efficient' business model is able to undercut the shops we used to use and which didn't 'offshore' their payments to Luxembourg.

The net effect of this is to reduce total corporation tax collected from the retail sector, not only because of Amazon's tax approach but also because of the loss of smaller retailers which were paying tax.

Amazon's retail and tax methods therefore hollow out the tax base that used to support the public services we all need. Indeed, it seems puzzling to us that Amazon can claim to be growing the economy this way when it looks to us that it might be contracting it instead.

What can we do about Amazon's tax avoidance?

It doesn't have to be this way. Ethical Consumer has been campaigning against Amazon's tax avoidance since 2009.

We call on:

• Consumers to boycott Amazon until it pays its fair share of corporation tax, and to tell the company why they are doing this.  

• The government to require Amazon to publish the sales, profits and taxes it has paid in each country that it operates in, and to close loopholes which allow it to avoid such enormous amounts of tax in this way.

• Amazon to pay taxes on its UK profits in the same way as other businesses do here so as not to distort our economy. It should publish profits and taxes paid on a country by country basis too, so that citizens can see that it is doing the right thing (or not). Until it does this, it has no right to criticise our estimates – which it commonly does – because its accounts globally are so opaque that it is not possible to come to any other conclusion. 

Sources and calculations for our Amazon tax estimates

Columns 1 & 2: Amazon's global sales and UK sales: AMAZON COM INC, 10-K Annual Report for each of the financial years shown, ending December 31.

Column 3: For 2020-2023 we took the average margin globally to be 7.35%". For 2024 we calculated that the average margin for the four quarters of 2024 had risen to 7.76%.

Column 4: Total estimated Corporation tax due $m. UK Corporation tax was 19% throughout this period until April 2023 when it rose to 25%. The 2023 calculations combine three months at 19% with 9 months at 25%. The 2024 calculations are all at 25%.

Column 5: Converted to sterling; Average USD to Sterling rate over the period 2019-2023 was 1.283492. For 2024 it was 1.278. 

Column 6: Estimated corporation tax paid:

• We could find no reported estimates for the 2024 period.

• 2021 to 2023

• 2020

• 2019

Previous Ethical Consumer research on Amazon's tax avoidance

This article updates our 2024 research which estimated that Amazon's corporation tax avoidance was around £433million for 2023, and a March 2022 article which found that in 2021, Amazon's tax avoidance could have cost the UK public purse up to half a billion pounds (£500,000,000).