Amazon tax avoidance: retailer pays £3m tax on £4bn UK sales

Online retailer also received more in government grants last year than it paid in corporation tax

LAST UPDATED AT 09:04 ON Thu 16 May 2013

ONLINE retailer Amazon is back in the dock after claims it received more in government grants last year than it paid in UK corporation tax, and the company could be hauled back in front of MPs to answer more questions about its finances.
 
The latest allegations of tax avoidance surfaced after the company filed its accounts at Companies House.
 
The figures reveal that Amazon paid £2.4m in corporation tax, out of a total 2012 tax bill of £3.2m, but also received £2.5m in government loans last year.
 
To add to the controversy, Amazon.co.uk Limited had a turnover of just £320m in 2012, although US filings have revealed that total sales in this country were worth £4.2bn last year.
 
By basing its EU operation in Luxembourg, the company avoids having to pay tax on its UK sales. "Amazon.co.uk is thought to have classified itself as a service provider to its Luxembourg business, Amazon EU Sarl, in order to reduce its tax bill," the BBC reports. "Its UK business employed 4,200 people at the end of 2012, compared with 380 in Luxembourg."
 
According to The Guardian, which has published an in-depth investigation into Amazon's finances today, "the online retailer is pushing the tax rulebook to its limits to minimise its tax bill."
 
The paper accuses Amazon of "pushing definitions close to breaking point" and says tax authorities are "unable, or unwilling, to prevent the imposition of aggressive tax avoidance structures".
 
With Google executives due to appear before MPs this week to discuss their UK finances, the Daily Telegraph says the figures have "reignited controversy over the tax paid in Britain by American corporations".
 
The paper adds that Amazon has refused to say what it used the £2.5m in government grants for, but notes that it has opened a new distribution centre in Hemel Hempstead and set up its "digital media development" headquarters in London last year.
 
What can be done? "The government is behaving as if the tax problem is so fiendishly complicated that only a full re-write of the system by the members of G8 will suffice," said Nils Pratley in The Guardian. But he insists: "When a company employs staff in the UK to conduct trade with UK customers it is doing business in the UK. If HMRC thinks its hands are tied, it had better explain why." · 

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