Amazon in new UK tax row as revenues surge

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Amazon Inc (NASDAQ:AMZN) has run into a new UK tax storm after it revealed its British arm paid just GBP293mln in tax in 2019 in spite of revenues rising by more than a quarter to GBP13.7bn.

The online giant, which is run by billionaire and world’s richest man Jeff Bezos, insisted that despite the sales surge operating profits had remained relatively low.

Amazon said that increased capital expenditure and R&D spending was partly responsible for the low tax bill, which also included direct taxes such as business rates and national insurance.

The online giant employs 30,00 people in the UK, most of whom work in Amazon UK Services, the group’s warehouse and logistics operation.

Amazon UK Services paid tax of GBP14.5mln on profits on GBP102mln and sales of GBP3bn, a 3% rise in tax on the previous year.

Total UK revenues of GBP13.7bn include the online grocery operation, IT services and video and music streaming subscription service Prime.

Labour MP Margaret Hodge described the tax paid as outrageous and said Amazon had a ‘moral responsibility’ to pay more.

Hodge heads the parliamentary committee on responsible tax and again accused the online giant of deliberately using opaque financial structures to export profits to low tax jurisdictions.

Bezos has an estimated net worth of close of US$190bn, but his company is facing renewed calls for a review of tax laws to stop the use of loopholes.

Retailers that have been forced to lay off staff and close outlets due to the coronavirus outbreak have been particularly vocal and say that not having to pay business rates gives Amazon a huge unfair advantage.

UK chancellor Rishi Sunak is also looking for ways to pay the burgeoning cost of locking the UK economy down for six months, something ironically that has given another leg-up to tech companies such as Amazon, Google and Facebook.

A 2% digital services tax on revenues from social media services, search engines and online marketplaces was introduced this year, with similar measures now in place elsewhere in Europe while a global tax is scheduled for next year.

In a statement, Amazon defended its tax payments record.

“The UK has now become one of Amazon’s largest global hubs for talent and this year we announced plans to create 10,000 new jobs in the country by the end of 2020,” it said.

“We pay all taxes required in the UK and every country where we operate and focusing on one small piece does not provide a full picture of Amazon’s overall contribution to the UK.

“Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive, low-margin business and we continue to invest heavily.”

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