back to article Amazon gets its tax excuses in early amid rising UK profits – but leaves El Reg off the press list. Can't think why

Amazon tried to head off negative column inches about its tax-efficient operations in Britain by cherry-picking journalists to brief on its latest financial results days before they hit Companies House. Last week, El Reg was told Amazon had approached The Guardian, the BBC, and other national outlets to discuss its 2019 …

  1. Phil O'Sophical Silver badge

    Not the fault of Amazon

    Amazon ducks its responsibilities to UK taxpayers by shifting profits offshore using opaque corporate structures.

    Amazon's responsibility to UK taxpayers is to obey UK tax law.

    governments [need] to get together and rip up the international rule book that has been in place for nearly a century, and move instead toward something called 'unitary taxation'.

    Precisely. If a government wants Amazon & their ilk to pay more tax, the solution is in their own hands. Change the laws that are preventing it. Moaning that they should pay more than the law requires because it would be "fair" is never going to cut it.

    We've yet to see the claw back of tax avoided in the past like we have seen in France and Italy in connection with Amazon.

    Avoiding tax is perfectly legal, it's tax evasion which isn't. If a company has avoided tax by exploiting loopholes in tax law, there's not much grounds for "clawing it back". Removing the loopholes for future payments is the way to go.

    Tax law is like so many other old laws, every time someone finds a loophole, a government will draw up a band-aid law to close the loophole, and that often opens others. It's a pile of warts on warts on warts.

    1. cbars Silver badge

      Re: Not the fault of Amazon

      Yea but come on, its really hard to work out how to publicly prevent these shinnanigans while still keeping it legal to pay your mates and profit on the sly - give the MPs a break! If they make it too hard, there will be no cushy job waiting for them when they get voted out, and the opposition will just open a loophole once they're in anyway, so really there is nothing to be done and we should all be grateful that the Americans let us keep any of our money at all

      1. Psmo Silver badge
        Paris Hilton

        Re: Not the fault of Amazon

        Also, it's hard for a government (any government) to fund the arms race between the tax lawyers of a multibillionaire company and a bunch of civil service.

        They (and we) are going to lose. The question is how much...

    2. fwthinks

      Re: Not the fault of Amazon

      While I agree with the basic issue, that the laws need to be changed, the whole avoidance / evasion discussion is misleading and used by businesses to justify what they do as being completely legal. In effect they are publishing one set of accounts to the tax man which represents an artificial company structure and actually operating in a completely different way. As mentioned in this article, where they have declared to the tax man that the UK has 3 Billion revenue, but then declaring 13+ Billion UK revenue to the shareholders - to me that is effectively lying about your revenue, as both cannot be correct.

      Take for example the ability for small businesses to claim tax on legitimate expenses. If a company claims a specific value in expenses which is higher than they really are entitled to, then they are using a valid tax avoidance method, but not being honest with the figures. The difference between a small company and Amazon, is that the tax man can easily audit small companies and determine the fraud, while they have no realistic possibility of doing it with Amazon, as the structures are so complex and they have unlimited funds to fight any legal case.

      So for me, these large companies are committing tax evasion, but it is not realistic for this proved conclusively given the complexities involved.

    3. James 139

      Re: Not the fault of Amazon

      I wish Margaret Hodge would understand this.

      EVERY time theres some, usually Amazon, tax article, she dribbles the same crap about how they're being, basically, "dishonest" and not paying the taxes they should, as if it's entirely Amazons fault, rather than how tax law works in the UK. I bet she wouldn't voluntarily pay extra tax, just because she earns more than minimum wage.

      Maybe she should start campaining for the Government, doesn't matter which one, to tax money leaving the country instead, that would catch everyone "sneaking" cash away.

      1. Yet Another Anonymous coward Silver badge

        Re: Not the fault of Amazon

        >rather than how tax law works in the UK.

        Tax law in the UK says that payments to overseas subsiduaries purely for tax avoidance ARE illegal.

        So Starbucks paying £50/lb for coffee beans from Starbucks in Switzerland

        Microsoft UK paying £100/copy for Windows to Microsoft Grand-Cayman for the rights to use the Microsoft logo - have all been found illegal.

        Amazon claiming all it's sales happen in Luxemburg or Apple claiming that a phone bought in Oxford St was really bought in Eire should also be investigated

        1. Anonymous Coward
          Anonymous Coward

          Re: Not the fault of Amazon

          "Amazon claiming all it's sales happen in Luxemburg or Apple claiming that a phone bought in Oxford St was really bought in Eire should also be investigated"

          *cough* European Union single market *cough*

          Amazon is operating as the EU broadly envisioned to try and make it attractive for large businesses to operate out of smaller countries and thus avoid having to large subsidies redistributing membership fees from the larger nations. While current practices may not exactly match the EU's desired outcome, the attempts to address it are mixed at the moment.

          I think there maybe even an attempt to address this within the UK but the solution chosen isn't universally popular...

          1. James Anderson Silver badge

            Re: Not the fault of Amazon

            Luxembourg's whole economy is based on tax dodging.

            Whether its "sorry we don't tax bank accounts so we have no data to share", low VAT rates, no tax on petrol, and ultra low company taxes. There whole legal system and tax regime is set up to collect a small amount of tax from income that would otherwise be taxed at a higher rate in the host country.

            1. Intractable Potsherd Silver badge

              Re: Not the fault of Amazon

              That's true, but I always find it a bit hypocritical of the UK to complain when many of the worst "tax havens" in the world have very strong ties with the UK.

        2. Symon Silver badge
          Thumb Up

          Re: Not the fault of Amazon

          @YAAC Agree totally.

          https://www.gov.uk/government/collections/tax-avoidance-general-anti-abuse-rule-gaar

          Also:-

          https://www.gov.uk/government/organisations/competition-and-markets-authority

    4. DavCrav Silver badge

      Re: Not the fault of Anne Sacoolas

      She had diplomatic immunity, probably. Who cares that she murdered someone and fled the country? She was obeying the law.

      Oh sorry, I thought we were defending evil monsters.

      1. Anonymous Coward
        Anonymous Coward

        Re: Not the fault of Anne Sacoolas

        "Who cares that she murdered someone"

        She was charged with causing the death by dangerous driving and its likely that she would have been found guilty of the lesser charge of causing death by careless driving based on no suggestion of drugs, alcohol or speed being involved and comparing other cases where the driver was on the wrong side of the road causing death due to collision with another vehicle. The UK (and many other countries) have always been relatively lenient about deaths caused in motor vehicle accidents.

        So no...not murder as she was driving at the time.

        1. Symon Silver badge
          Childcatcher

          Re: Not the fault of Anne Sacoolas

          Who was advising this woman? She made a tragic mistake. A young man lost his life. But she had no intent, she would've been convicted but with a suspended sentence, and most probably forgiven by the man's family if she'd faced up to the music. Fuckin' lawyers...

          1. Intractable Potsherd Silver badge

            Re: Not the fault of Anne Sacoolas

            I am far from convinced lawyers had any part in the decision to go on the lam. This has all the hallmarks of thoughtless action which lawyers had to deal with afterwards.

            1. onemark03

              Re: Not the fault of Anne Sacoolas

              If some Brit had killed someone in a road accident in the US, he or she would have been behind bars long ago, diplomatic status or not.

  2. IGotOut Silver badge

    There is a possible way of getting tax out of them.

    This would work for other online sales such as AO as well.

    If a product is bought online from a company with a turnover of £X, then the dispatch point is taxed as shop would be. I.e. no longer a warehouse, but a retail outlet.

    1. DS999

      Re: There is a possible way of getting tax out of them.

      And if they closed warehouses in the UK and supplied goods from ones in Ireland or France instead?

      1. John Brown (no body) Silver badge

        Re: There is a possible way of getting tax out of them.

        After the end of this year, import duties!

  3. Smooth Newt Silver badge
    Unhappy

    Same old, same old

    Just file "tax avoidance by large multinationals" along with all the other things that the opposition always vehemently criticizes, and the government always tacitly encourages, whichever party is in power. It's been like that all my life.

    And expect normal service to continue as normal after the two parties reverse their roles in 2024. Covid- and Brexit-supercharged deficits will require very large tax rises for all the little people, but not for anyone who matters.

    1. shade82000

      Re: Same old, same old

      You speak the truth, it's always been like this.

      Party A is in power. Party B says things X, Y and Z need to be changed which would benefit everyone. Party A say party B previously did this and that other change when they were in power which left things a mess, and they say they would need to first clear up that mess which is why they can't implement X, Y or Z.

      Then every few years they swap over and party A now calls for X, Y and Z, and party B gives all the reasons why it can't be done.

      Party A and B, thing X, Y and Z can be anyone or any thing. It literally doesn't matter which party they are or who came before them, they are all the same.

      Truth is they're all only interested in being self-serving pricks and helping out their rich CEO friends. Actually running the country properly is just a necessary inconvenience that comes with being in power, that they just have to give the illusion of doing. The whole point of their game is to keep people divided enough that they don't notice the above happening

  4. Lon24

    Indirect Hit

    Direct taxes are, in theory, the fairest taxes whether personal or corporate. Regrettably they are also the easiest to avoid if you can afford to. Amazon can. Nowt's going to change that.

    Bellyaching about their corporation tax is righteous but self-defeating. If they double it next year - so what? It's just possibly a new ward for a hospital. It still isn't going to register at government tax income levels. I'm afraid indirect taxes is the way to get this monster to shoulder its responsibilities to us. Sales taxes - forcing them to pay decent wages so more tax gets payed by employees is a win-win for the people and the nation. Taxes on their delivery network to better represent their use of public infrastructure, taxing their real carbon emissions - and so on.

    Each not only help paying for the access to our markets but, as much as possible, directing them to do the right thing profitably.

    1. James Anderson Silver badge

      Re: Indirect Hit

      The fairest thing would be to ditch corporation tax.

      Its effectively a tax on small to medium British companies who cannot do the international tax tango.

      No fiddling with the regulations will increase corporation the tax take from multi-nationals in any significant way. Just accept it and level the playing field so local companies are not handicapped.

  5. Greybearded old scrote

    There's a more general problem here

    The online giants are getting all the attention, but it has never been just them. The longer established firms have been playing similar games all along, it's just business as usual.

    Personally I'd ditch corporation tax altogether because it's just too easy to game. For very large turnover values, reduce the VAT that can be refunded. VAT is charged at 20%, refund 19% after £1 billion. Or some such, I'm sure we could set the values so that most companies that have been playing fair would pay a similar amount as before. (If you can find such a beast. Unicorns, virgins, and honest tax returns... )

    Not singling out any particular industry has political benefits too. The Donald has already threatened us with a trade war if we attack US based tech companies, so we could demonstrate that we weren't. (Not that facts are very persuasive, of course.)

  6. Cuddles Silver badge

    Improvement

    "the tax on profit stood at £6.3m, an improvement on the £1m of last year."

    Is that an improvement from Amazon's point of view, or from everyone else's?

    1. Anonymous Coward
      Anonymous Coward

      Re: Improvement

      Nope, it is not an improvement

      it is an

      INSULT

      to all small buisness owners in the country. They can't induldge in [cough][cough] licensing deals to move their profits to offshore tax havens.

      Amazon (and the rest) are scumbags.

      1. Anonymous Coward
        Anonymous Coward

        Re: Improvement

        "to all small buisness owners in the country. They can't induldge in [cough][cough] licensing deals to move their profits to offshore tax havens."

        When did you last get a receipt from a plumber, or builder for small works etc ?.

        How many small businesses pay themselves using "dividends" instead of a wage which would incur taxes for NHS etc ?

        Or give themselves a "Directors Loan" which never seems to be repaid ??.

        Then astoundingly they (some on TV) were complaining that the current furlough was not helping them as they had not paid into the system like everyone else (PAYE).

        I agree though, Amazon shenanigans should be examined and laws changed accordingly.

        1. MatthewSt Bronze badge

          Re: Improvement

          Receipts I can't comment on, but your other points aren't as relevant as they used to be. To pay a dividend the company needs to have made a profit, so you're paying 19% Corporation Tax on the profits etc. In summary, 40k of business paid by salary gives you 28.2k take home, whereas 40k of business paid in the most tax efficient way possible (minimum salary, maximum dividends) gives you £32.6k take home. The savings get smaller the more you earn. If you have a long running (more than 8 months) director's loan, then it's illegal to not pay tax on it.

  7. Death_Ninja

    Transfer Pricing

    Transfer Pricing is how these companies syphon taxes out of countries and into a low tax location.

    That Mega Corp logo on the packaging? $5 per use payable to the IP owner of The Logo - Mega Corp Cayman Islands Ltd. The carboard box? Patent owned by Mega Corp Cayman Islands Ltd and it costs you $10 per time you make one..... and so on. Just so happens that $15 is most of the profit on each sale, funny that. UK branch of Mega Corp sadly reports each year it made hardly any profit. Meanwhile in the Cayman Islands, Mega Corp have agreed to build a school or some money into the civil service retirement fund in return for paying $1000 of tax - afterall, they only have a mailbox address there at an office of a law firm.

    It has fully legit purpose, of course, its just they like to play the game and abuse it. It remains totally legal however.

    It is possible to counter it, assuming of course the normal process of democratic government isn't subverted by lobbying or being lent on by a government of the country where the giants come from...

    https://www.taxjustice.net/topics/corporate-tax/transfer-pricing/

  8. Boris the Cockroach Silver badge
    Unhappy

    You can add another

    objection to amazon including employee taxes as 'tax paid by amazon'

    It isnt paid by amazon , its taken from the money amazon pays its employees with (whether said employees want the government taking 30% of their wages or not)

    The only employee tax is employer's NI contribution

    But as previous comments have said the only thing enabling the likes of amazon to move its profits out of the country are the very politicians who are saying how immoral it is that they are moving profits out of the country......

    1. maffski

      Re: You can add another

      'It isnt paid by amazon , its taken from the money amazon pays its employees...'

      Nope. Just cos it's your name on the cheque/check doesn't mean it's at your cost.

      Amazon itself is just a legal construct, it doesn't bear the cost of anything as it has no desire to consume (the only cost of anything being the opportunity cost).

      All taxes are ultimately paid by some combination of the customer, employee and shareholder.

      1. Boris the Cockroach Silver badge

        Re: You can add another

        OK take this example

        Amazon employs a person , agrees to pay them £10 000 yr, £1000 of that going on income taxes

        Government gets voted out, and the ebil socialists take over and change income tax rates to 90%

        Employee approaches amazon and asks for another £8000 per year to cover the rise in tax, amazon responds your contract is 10 000/yr tough luck.

        The cost of taxation on an employee's income falls on the employee not the employer

        1. Smooth Newt Silver badge
          Happy

          Re: You can add another

          The cost of taxation on an employee's income falls on the employee not the employer

          Yes and no. There is something called Employers National Insurance, which is a tax that the employer pays and is dependent upon the employee salary but, unlike employee national insurance, never appears on the employee's payslip. It is a great wheeze, since it allows the Government to raise direct taxation without the voting hoi poloi noticing, but it does increase the cost of employing someone.

          In a sense, the employee still pays for it, since it would depress the amount of salary that an employee could negotiate in an efficient (in the economic sense) market for their services. But we don't have an efficient jobs market, so it doesn't really happen.

        2. maffski

          Re: You can add another

          And yet contractors get paid more than permanent staff? Your work is worth what it's worth.

          That can be wages, taxes, sick pay, holiday pay, a staff canteen, stock options, free bagel Thursday, whatever.

          And you demanding an extra £8000 per year depends entirely on relative costs - can you really leave or is it an empty threat? Can I replace you with someone else for less? Will that cost more in productivity than I save in wages? Can I replace you with automation? How much investment will that take?

        3. codejunky Silver badge

          Re: You can add another

          @Boris the Cockroach

          "Amazon employs a person , agrees to pay them £10 000 yr, £1000 of that going on income taxes

          Government gets voted out, and the ebil socialists take over and change income tax rates to 90%

          Employee approaches amazon and asks for another £8000 per year to cover the rise in tax, amazon responds your contract is 10 000/yr tough luck."

          Amazon responds by handing out notices to its employees that it cannot afford to keep. If £10,000 per year is the going rate for that worker that is the rate to be paid if Amazon wants a worker for that role. If the gov make that job too expensive to employ for (the problem with minimum wage) then the job stops existing. The going rate only goes up if the value of the job goes up.

  9. deadlockvictim Silver badge

    The rising tide lifts all boats

    Good people of England, Ronald Reagan, Margaret Thatcher and the supply-side economists have you covered. Didn't you realise that it is a good thing that the money is all going to Amazon and not to the Government? The Government will only waste it on healthcare and the like.

    No, the rising tide lifts all boats and as long as you have a boat (better still a yacht), you'll be grand. It's all for the best. Whose best, they didn't say, but I'm sure they meant you and me.

    1. Greybearded old scrote

      Re: The rising tide lifts all boats

      I prefer the version that goes, "Rising super-yachts don't lift the tide."

    2. Anonymous Coward
      Anonymous Coward

      Re: The rising tide lifts all boats

      The Government will only waste it on healthcare and the like. or sub-standard PPE or dodgy looking satellite companies, or useless test and trace systems... ad nauseum.

  10. mark l 2 Silver badge

    We have already seen how Amazon reacted when they were forced to pay an additional 2% digital services tax, they put the fees up for the third party sellers to offset it. As obviously if Amazon had absorbed the 2% tax like ebay did, they would have had made a few million less profit a year.

    1. Death_Ninja

      " if Amazon had absorbed the 2% tax like ebay did, they would have had made a few million less profit a year"

      Do you mean reduced their published figures to offset the 2%? Because that's likely what they would have done.

      One things for sure, that 2% was definitely not come out of Bozos pocket.

  11. sabroni Silver badge
    Facepalm

    If only there was something we could do

    like, I don't know, stop fucking buying stuff from them?

    1. Anonymous Coward
      Anonymous Coward

      Re: If only there was something we could do

      So, we stop buying until the pay more taxes, and once they've increased their prices to cover the cost of that we start buying again?

      You're effectively saying that we should pay those taxes.

      1. Anonymous Coward
        Anonymous Coward

        Re: If only there was something we could do

        @Anon

        Or, you know, just buy your products elsewhere, not using Amazon at all. Other places have items for sale too..

  12. Danny 2 Silver badge
    Pint

    "It's almost as if somebody had a guilty conscience, though to have a guilty conscience, one must have a conscience in the first place."

    Wonderful writing Richard, have a pint on me. Although for tax reasons you have to buy it yourself.

  13. Rol Silver badge

    If you're not in the club already, you're not getting in.

    The problem with Paul Monaghan's suggestion of unitary taxation, is that he is asking the foxes if they wouldn't mind helping to build a more secure hen house.

    It is our political elite who have supported the convoluted tax system down the years, and will no doubt go to war to maintain their questionable revenue streams.

    Yes they would love to have the tax shenanigans of Amazon et al, reined in, as they only serve to raise the awareness of their own devious and conniving tax exploits, but do not expect them to go so far as to cut their own noses off to achieve it.

    If they could write tax legislation that worked for their interests in Guernsey, Cayman, etc, and against the likes of Amazon, they would, but they can't, as Amazon is only using the legal tax loopholes that our political elite foolishly believed was theirs alone to exploit.

    Amazon might have been ripping off the UK for the past few years, but Lord and Lady Fancy Pants and their ancestors have been at it for centuries.

  14. Falmari
    WTF?

    How much does it cost to count money?

    “Much of their UK income continues to be shunted to Luxembourg, where there is a 'loss-making' subsidiary that is not only not paying tax, but is generating enormous tax reliefs that can be used in the future to ensure that little or no tax continues to be paid.”

    So, the money from each EU company, after local costs have been paid (wages infrastructure etc) goes to Luxembourg with its low tax rates. But hey Amazon does not even pay those lower taxes as for some reason the Luxembourg company does not make a profit. How the fuck does it not make a profit all it does is collect the money. How much does it cost to count money? More than the amount counted!

    Something is not right why would you operate a company that year on year is losing money?

    I know they will be running scams like the beans from Switzerland and IP form the the Caymans.

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