Amazon UK: Sales Up, Tax Liability Down

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Amazon’s Corporation tax bill more than halved to just £7.4 million in 2016 on a turnover 50% up at £1.46 billion, compared to a bill of £15.8 million on sales of £946 million. Amazon also received a credit from the tax man for £1.3 million to offset against future bills.

News of Amazon’s tax liability has immediately led for calls by Margaret Hodge (who used to chair the the House of Commons Public Accounts committee which hauled Amazon over the coals in Parliament over their tax affairs) for consumers to boycott the site. Calling for a boycott is a pretty regular occurrence and has been going on for years whenever Amazon’s accounts are published but it would seem that the British public are far too in love with Amazon’s service to use other retailers.

It’s worth noting that Amazon’s UK revenue are mainly services and the tax is on fees paid by retailers who sell on Amazon. Amazon’s own retail sales are funnelled through Luxembourg. Amazon reports it’s total UK sales to HMRC but the public don’t get to see these figures as they’re hidden away in their European tax accounts.

Looking at recent news on Amazon’s entire business their worldwide profits are down despite their share price hitting record highs and recently Jeff Bezos becoming the richest man in the world for a time. They’re investing massively around the world on many fronts including everything from warehousing, logistics, Video content (such as The Grand Tour and ATP Tennis), not to mention food, shipping, drones and countless other initiatives such as Amazon Web Services and overseas expansion. In the UK there are drones in Cambridge and a new flagship London office.

“We’ve invested over £6.4bn in the UK since 2010 including opening a new head office in London and development centres in Cambridge and London this year, and creating 5,000 permanent jobs across the country in research and development, our head office, customer service and fulfilment centres, to bring our total workforce to 24,000”
– Amazon

Amazon’s strategy is to ignore profits and aim for growth and investors appear to love this tactic even if governments looking at tax revenues don’t.

For the record Amazon say “We pay all our taxes required in the UK and every country where we operate. Corporation tax is based on profits, not revenues and our profits have remained low given retail is a highly-competitive, low margin business and our continued heavy investment.

Calling for an Amazon boycott is all well and good, but that will hurt Tamebay readers selling on the marketplace. Even avoiding Amazon retail and trying to purchase from the third party retailers selling on the site won’t make much difference as as many as half of all shipments from Amazon are now from third party retailers.

In truth, if governments don’t like how corporations pay taxes and invest which cuts their profits then a change in the tax regime is the answer. Bear in mind though, stopping companies such as Amazon from investing hence cutting their corporation tax is likely to hurt the economy in the long term if they choose to invest elsewhere.

There is no question that the high street is hurting as consumer habits change, and as much as MPs might consider Amazon evil for paying so little tax, it’s consumers that are buying into Amazons model and until someone offers a more compelling proposition it’s likely that we’ll be seeing the same outcry over their relatively low tax bill the same time next year, as we did last year and the year before. Plus it could be worse, at one point it was possible Amazon would invest so heavily that it was thought that they might not have paid any tax at all!

10 Responses

  1. Clucking Bell! Why am I being asked to pay nearly 33 grand in income tax and nic on 100k by HMRC when Amazon is only paying about 0.07% tax on their £1.4 billion.

    This stinks.

  2. The buck stops at the Politicians door, they run the country not Amazon. HRMC are a joke, they will chase the small business but will never chase the real problem. However the Governments and career Political Class are the ones who are letting this happen.
    I do not like selling on Amazon but am left with little or no choice and we JOE Public are to blame for this, as long as it does not effect the little bubble (till it does)
    HRMC staff are useless also, your on a loser, anyone tried phoning that VAT helpline they have not got a clue.
    Amazon are taking the whole country for a ride, and they actually are destroying the wider economy so long term YES I would let them invest elsewhere and say bye bye.
    Could you imagine Donald letting a UK firm ride “roughshot” over the the US economy.
    Amazon take a lot more out than they put in and that is before the social cost to the business and jobs they are costing.

  3. On the Amazon tax scale, I’d only have to hand the revenue a £20 note for my tax, instead of 33 grand. Not to mention the 16.5k they want on account for next year.

    I bet Amazon spend more on tea and coffee than they pay in tax.

    This country is b*ll*cks

  4. Based on profits they made a healthy contribution, presumably nobody on here wants to pay corp. tax based on turnover?

    Andy, you don’t have to pay on account, you can ask your accountant or you can sign a form sa303 from memory. You’ll still end up paying it if you owe it but you don’t have to upfront, interest might be added but minimal v’s stress of knowing you have to find X before you’ve made it.

  5. Amazon may get people to spend money they wouldn’t normally but a lot of the sales are taken from businesses who would pay their fair share of tax.

    Not only is this putting people out of business because they cannot compete due to Amazon side stepping tax, money is not coming into to the exchequer to help pay for public services like health and education so the whole country suffers.

    Amazons ultimate goal is to put everyone else out of business so they are the only player in town and then they can charge what they want. Maybe the future will be Amazon hospitals, Amazon prisons and Amazon security and mercenaries.

  6. Sorry I do not see the problem.

    Amazon invest in their business and the UK economy and that reduces the amount of profit they make and tax they pay.

    Surely we could all do the same, expand our business, employ more people, invest in more technology.

    Make less profit and pay less tax. Not rocket science is it.

    I am not an Amazon fan, I hardly ever buy anything on there but we do well from selling on there, not as well as they do out of us.


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