{"id":14947,"date":"2012-04-05T09:14:03","date_gmt":"2012-04-05T08:14:03","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14947"},"modified":"2012-04-05T09:14:03","modified_gmt":"2012-04-05T08:14:03","slug":"how-to-put-a-stop-to-amazons-tax-games","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/04\/05\/how-to-put-a-stop-to-amazons-tax-games\/","title":{"rendered":"How to put a stop to Amazon’s tax games"},"content":{"rendered":"

I've already mentioned<\/a> the Guardian's news story<\/a>, published this morning, discussing Amazon's UK tax affairs.<\/p>\n

The essence is this. In 2010, as I surmise it, (and I'm being cautious) the turnover in the UK could have been at least \u00a32.8 billion - and may have been over \u00a33 billion of actual sales to UK\u00a0customers based on Amazon's worldwide accounts<\/a>. Of that, according to the Guardian, just \u00a3147 million was accounted for here, but all of that would have been billed to Luxembourg for what might be\u00a0called\u00a0sales fulfilment services. Just \u00a31.9 million was paid in tax here in the UK in 2010. There were however 2,265 people in the UK and just 134 in Luxembourg - servicing 27 countries, meaning maybe just 10 at best were servicing the UK. And let's then make a further assumption - that the fixed assets in Luxembourg are pretty meaningless - say \u00a35 million in total but that the Swindon\u00a0\u00a0warehouse\u00a0cost, and I\u00a0suspect\u00a0this is modest, \u00a3100 million. I stress - I'm guessing this but. And finally, the profit in the UK should (and I suspect I'm low on this one) be \u00a3125 million.<\/a><\/p>\n

But with these facts we can recalculate what Amazon should pay here in the UK using the unitary apportionment formula\u00a0method\u00a0of taxation I discussed yesterday<\/a>. We split the profit in accordance with a formula.<\/p>\n

First split the profit in three. One third is then allocated between the UK and Luxembourg based on where the sales really are. Well, all these sales are to UK\u00a0customers\u00a0so that ratio is 100% to the UK and 0% to Luxembourg. So that \u00a3125 divided by three = \u00a341.66 million of profit allocated to the UK.<\/p>\n

Then we split the next\u00a0third\u00a0on the basis of where the people are. That's 2,265 here and 10 in Luxembourg. \u00a341.66 million x 2,265\/2,275 = \u00a341.5 million to the UK and \u00a3166,000 to Luxembourg.<\/p>\n

And then let's do assets - admittedly the one I have had to guess. The guess is \u00a3100 million here and \u00a35 million in\u00a0Luxembourg\u00a0so that is \u00a341.66 million x 100\/105 = \u00a339.7 million of profit here and \u00a31.96 million to Luxembourg.<\/p>\n

Add it up and near enough \u00a3122.8 million of profit would be in the UK and \u00a32.2 in Luxembourg.\u00a0Instinctively\u00a0that feels right of course -\u00a0because\u00a0that is\u00a0exactly\u00a0how the economics really are. Glaringly obviously, as Amazon's accounts admit, the market is here in the UK, not in Luxembourg. But the game of abuse that is being played means that almost all the profit goes to\u00a0Luxembourg\u00a0on this one - and almost none to us.<\/p>\n

That's why we need radical\u00a0corporation\u00a0tax\u00a0reform\u00a0in the Uk and worldwide. IUnitary\u00a0apportionment\u00a0formula\u00a0taxation stops tax haven abuse of countries\u00a0like\u00a0the UK. It's glaringly obviously fair and the data to do it could be\u00a0available\u00a0if we had\u00a0country-by-country reporting accounts.<\/p>\n

The time for it is now.<\/p>\n","protected":false},"excerpt":{"rendered":"

I’ve already mentioned the Guardian’s news story, published this morning, discussing Amazon’s UK tax affairs. The essence is this. In 2010, as I surmise it,
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-14947","post","type-post","status-publish","format-standard","hentry","category-tax-avoidance"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=14947"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14947\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=14947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=14947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=14947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}