Renewed anger at Amazon UK tax bill

Amazon appears to have done little to lay to rest allegations of arrogance and tax avoidance levelled against it
Amazon appears to have done little to lay to rest allegations of arrogance and tax avoidance levelled against it

Online retail giant Amazon has fuelled further anger over its tax bill as it emerged the group’s UK business paid just £11.9 million in tax last year, despite the group taking £5.3 billion in sales from British shoppers.

The firm, which employs more than 7,700 people in the UK, saw sales in this country rise 14 per cent last year, according to filings in Companies House.

But its subsidiary recorded a profit of just £34.4m, and so paid tax of £11.9m.

Amazon’s UK sales, which represent 9.4 per cent of its global turnover, are taken through the group’s Luxembourg arm, called Amazon EU Sarl.

Sales from many countries in Europe are booked at its Luxembourg business, and are not taxed in the country where the shopper carried out the transaction.

Under mounting pressure, Amazon said last month it had begun booking UK sales in this country, which may see it pay more taxes.

Details of its 2014 tax bill in the UK attracted criticism from the TaxPayers’ Alliance.

Jonathan Isaby, chief executive of the alliance, said: “You can understand people’s anger at organisations like Amazon perceived not to be paying their fair share, but our frustration should be focused at the politicians and bureaucrats who have created our ludicrously complicated tax code.

“It is so riddled with loopholes and exemptions that those who can afford to find them will be able to.

“It’s time for a radical simplification of the tax code to make it easier to administer, to make the line between ‘avoidance’ and ‘evasion’ more obvious, and with fairer and lower taxes across the board.”

In April, Chancellor George Osborne said firms that move their profits overseas to avoid tax will be subject to a “diverted profits tax”.

The so-called “Google Tax” is designed to discourage large companies from diverting profits out of the UK to avoid tax.

Firms such as Apple, Google and Starbucks have all seen their European tax payments criticised for being too low.

Mr Osborne said in April: “Let the message go out - this country’s tolerance for those who will not pay their fair share of taxes has come to an end.”

He added he would be closing tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads.

Mr Osborne said the new tax measures were expected to raise £3.1bn over the next five years.

In October, the European Commission (EC) said it would launch a probe to see whether Amazon’s tax affairs complied with state aid rules.

The commissionsaid it would look at a 2003 tax agreement between Luxembourg and the retailer because it said most of Amazon’s European profits are recorded in Luxembourg, but are not fully taxed in the state.

This investigation follows other probes the EC has launched into the tax affairs of computer giant Apple, coffee chain Starbucks, and the financial arm of car maker Fiat.