Amazon is a giant global company. Everything about it is vast. It is owned by the world’s richest man Jeff Bezos whose personal fortune is estimated to be $112 billion
It has a workforce of 647,000 globally of which about 27,500 of those work at various locations in the UK including its 22 fulfilment centres (FC), London HQ and three software development centres. Its Glenrothes FC is a staggering 1.5million sq.ft. , the size of 17 football pitches.
The size of Amazon’s tax avoidance is also vast. According to a recent report by tax transparency campaign group Fair Tax Mark, Amazon avoids tax on a colossal scale by shifting revenue and profits through tax havens or low-tax countries, and for also delaying the payment of taxes they do incur.
It said the group paid just $3.4bn (£2.6bn) in tax on its income so far this decade despite achieving revenues of $960.5bn and profits of $26.8bn. Fair Tax Mark said this means Amazon’s effective tax rate was 12.7% over the decade when the headline tax rate in the US has been 35% for most of that period.
Amazon said the report’s “suggestions are wrong” and that the company had “a 24% effective tax rate on profits from 2010-2018”. Amazon said the company’s “profit margins are low” and that “naturally results in a lower cash tax rate.”
Fair Tax Mark said Amazon’s accounting was so complicated there was “no way to discern” how much tax Amazon should be paying or is paying in the UK despite its filings to the US tax authorities showing it made $14.5bn in revenue in the UK last year, and $75.8bn over the decade.
Amazon’s two UK subsidiaries – Amazon UK Services and Amazon Web Services UK – had combined tax bills of only £83m over the decade, as the bulk of sales are booked via Luxembourg. Amazon UK Services arm paid £14m in corporation tax last year.
In addition the GMB union estimates Amazon should have paid £103million corporation tax last year. But Amazon’s biggest UK arm which discloses its accounts paid £14million.
Amazon refuses to disclose how much UK corporation tax it pays. So the GMB made its own calculation, based on a profit margin of 4.8%.
On £11.3billion of UK sales last year, there would be £544million profit, and £103million would be due in corporation tax. Amazon UK Services, the largest of the firm’s UK businesses to publish accounts, made £75.4million profit on £2.3billion of sales last year, and paid £14million in corporation tax.
Prof Richard Murphy, a tax expert from City, University of London, said “Analysis of Amazon’s accounts shows it underpays tax in the UK.”
Mick Rix, of the GMB, said: “Small businesses are being forced to the wall while billion-dollar multinationals enjoy tax breaks thanks to a cosy relationship with Tory cronies.”
Amazon said: “These calculations are completely incorrect.
“Among other things, they assume uniformity of profits across geographies, which isn’t the case.”