Amazon.co.uk, Britain's biggest online retailer, generated sales of more than £3.3bn in the country last year but paid no corporation tax on any of the profits from that income — and is under investigation by the UK tax authorities.
Regulatory filings by parent company Amazon.com with the US securities and exchange commission (SEC) show the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, focuses on a period when ownership of the British business was transferred to aLuxembourg company.
The SEC filings, highlighted by Bookseller magazine, show that in the past three years, Amazon has generated sales of more than £7.6bn in the UK without attracting any corporation tax on the profits from those sales.
HM Revenue & Customs (HMRC) refused to confirm it was investigating Amazon.co.uk, and its inquiries could be a routine audit. But Amazon's tax affairs are being investigated in the US, China, Germany, France, Japan and Luxembourg.
I should add I am quoted in the story - but for the record, this is Ian Griffiths story, not mine.
But let me flesh it out a bit. Amazon's accounts are here. The 2010 filing shows world wide sales of $34.2 bn. The UK sales are reported to be between 11% and 15% - so let's call it 13%. That's $4.4bn. That's at HMRC exchange rates just over £2.8 billion. The profit rate overall was 4.4%. So UK profit could have been expected to be £125 million and tax due at 28% £35 million.
In fact the Guardian reports that UK recorded sales were less than £150 million and profit and tax were negligible. That's becasuye all the sales came from Luxembourg - the Uk merely billed Luxembourg to ship the orders Luxembourg supposedly handled.
Now we all know that's nonsense: the order will go straight to Swindon and be shipped from there (now Jersey is out of the scene) and Luxembourg's involvement will be minimal - as the number of people in each location as reported by the Guardian shows is inevitable.
How can this happen? Because the UK's 'open for business' policy is to not ask questions on tax. We'll let a multinational do what it likes in its structuring to avoid upsetting them - inclduing letting them say that their sales really don't take place here when they very obviously do - dammit, they're even accounting for VAT on them here but still say they're not in the UK.
And then HMRC have the gall to say the corporate tax gap on avoidance is tiny - maybe £1 billion. I say it's £12 billion. That's because I sgtart with the economic reality of the accounts - as Ian Griffiths on the Guardian did. HMRC start with the tax returns - which are submitted after HMRC have allowed whole rafts of profit to be swept aside.
No wonder HMRC's data is laughably wrong - it turns a blind eye to the reality of the abuse hat is happening. And it's time that stopped, in the interests of us all.
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You obviously don’t give a damn because your book’s still listed on Amazon. So stop the faux outrage.
That’s my publisher’s decision – not mine
How convenient. I bet you still accept the pay cheques though.
This is a fatuous argument
My pulling out of Amazon – even if I could – would not change Amazon
I try to buy product elsewhere – and I usually promote other ways of buying my book
But the reality is that boycotts en masse have symbolic value and help
But the best thing I can do is argue to change the system and denying people access to the argument does not help that
But of course as a pedant you pick the lowest common denominator argument
I was really astounded to read this article this morning. I have to confess that I use Amazon (mainly for purchases of rather obscure world music CDs for the husband) but now I will be actively searching for another supply source. This tax abuse has to stop and Labour must admit that it was wrong to allow this to develop on the scale which it has. It is not surprising that our high streets are being adversely affected as retail outlets cannot compete, and it is pointless for Mary Portas to witter on about town teams to rectify this. Many towns already have town centre managers often funded by their local authorities as part of their economic development teams to promote town centres. Labour has to focus business policy on SMEs which are the real job creators in the UK and pay less attention to the large corporates some of which we discover to our cost are not paying their fair share of tax.
I am glad I cancelled my account with them.
[…] I’ve already mentioned the Guardian’s news story, published this morning, discussing Amazon’s UK tax affairs. […]
So you caluclate that the biggest online retailer in the country, with sales of £2.8bn has managed to avoid £35m in corporation tax and you extrapolate this that HMRC’s estimate of £1bn of corporate tax avoidance is actually £12bn? That seems a little far fetched.
Oh come on – go read the stuff
[…] The Scottish government has subsidised Amazon by £10.6 million to undermine Waterstnes and the small booksellers north of the border, whilst not paying tax in the UK. […]
AMZN is an American company. It was created and funded by Americans and is now owned and managed by Americans.
It owes the UK, or for that matter anyone outside of the United States, absolutely nothing.
Here is a suggestion to all the Euro- and Anglo-moaners here. If you really want to have an Amazon to tax (or a Google, Apple, Microsoft, Cisco, etc. etc.), why don’t you wake up from your lazy socialist torpor and start your own?
How wrong you are
We grant it its licence to operate here
It owes tax on is UK profits as a result
You really don’t get society do you Ted?
Ted actually makes an interesting point in a way: why doesn’t/hasn’t the UK produced a Google, an Amazon, an Apple or a Microsoft. These are the types of companies that we’re going to need in the future and the UK lags far behind.
As for Amazon, it is clear that the average UK consumer needs Amazon far more than Amazon needs the UK.
Respectfully – that’s not obviously true
Perhaps Ted would also like to tell us what would happen is there was a fire at the Swindon Warehouse whether they would not expect the the Wiltshire Fire Brigade to turn up as Amazon don’t owe them a thing.
Also what would happen if there was a burglary at any of the Amazon warehouse in the UK. As they don’t owe the police anything, perhaps Amazon will issue a waiver asking the police not to come and investigate!!
Aren’t these tax laws simply part of the rules that govern the EU? The Treaty of Rome enshrines them and to overturn them we’d need to change that?
Any company in the EU can freely supply to any consumer in the EU, isn’t that right?
So it’s not really the UK’s “open for business strategy” at all, but instead the basic rules that govern the entire continent?
And that basic rule is destroying the continent now – you may have noticed
Al;most all its woes are down to that mistaken belief in the free movement of capital
http://news.bbc.co.uk/today/hi/today/newsid_9711000/9711255.stm
Thanks
Good work – you were very cogent on that BBC piece. I am shocked that this is going on & that the Co-coalition & Labour parties have accepted it – if only because Amazon are not on “a level playing field” and are indirectly damaging businesses like HMV, Game and still sadly missed Borders book shops.
By the way I had not realised I could buy as cheaply elsewhere, for example,from Waterstone’s web site where the April paper pack release Alistair Darling’ s “Back from the Brink” was same price as Amazon.
Its true that Amazon can undercut UK based booksellers etc because if they don’t pay CT they can share their tax unpaid with the customer via a reduced margin. So effectively by buying from Amazon you are doing no differently to paying a builder cash in hand. Though Amazon would argue what they are doing is legal.
Anyone could have set up such a business but why would anyone now bother given that Amazon dominate the market and out compete everyone else. You need to be massive to be able to put a believeable front company up in Luxembourg and pay for big 4 advice to do it properly. Not many start ups can afford it. You might aswell say anyone could start up a new TESCO or Walmart.
Its an interesting contrast with the internet gambling industry all the domestic part of which went offshore over the last few years, but the latest budget will allegedly force them back. If businesses are making profits out of the UK with new technology (not that new anymore) taxing jurisdictions obviously need to adapt to tax them properly. Whats the problem with that? If we do nothing we are being played for suckers. You have to wonder how much is reaching the Tories by the back door if they let this continue.
[…] Amazon’s — adding £35 million to the UK’s tax gap […]