Amazon’s UK tax bill has fallen to just £4.6 million, despite pre-tax profits in the country almost tripling to £72.3 million.
The company has also been allowed to defer £2.7 million, meaning that it has paid just £1.7 million in UK taxes.
Amazon explains this low figure by pointing to the £1,000 in shares it pays to its warehouse staff every year – revenue that is non-taxable under UK law. Each of its full-time employees is entitled to this share-based compensation. Directors are also likely to receive payouts in this way, which are far higher and also exempt from taxation.
But even after these payments have been accounted for, Amazon’s tax rate appears to stand at just 6.4%. Considering the anticipated tax rate of 19.25% for 2017 in the UK, that leaves £9.5 million in expected taxes unaccounted for.
This shortfall is based on revenue registered in the UK. But the figure of potential tax avoided grows substantially if considering sales that took place in the UK but were accounted for abroad.
Sales registered through Luxembourg
In 2017, almost 75% of Amazon’s UK revenue was registered through the company’s Luxembourg subsidiary Amazon EU Sarl. That’s £6.88bn of UK sales.
This implies that Amazon’s confirmed taxes represent a rate of just 0.5%.
Whilst Amazon claims that these sales are being taxed at a rate of 25.5%, it is impossible to track this figure from Amazon’s accounting, or to determine in which country the tax was paid. As tax expert and campaigner Richard Murphy points out:
“Amazon’s tax looks low because we can only confirm payment of tax of £4.7m, which is paid at one third of the expected rate on about one quarter of its UK activity. That could imply more than £50m of tax needs to be accounted for.”
The US-based multinational announced record-breaking profits of $2.5bn in the most recent quarter.
Ethical Consumer is renewing its call for a boycott of Amazon over its tax avoidance.
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