Amazon UK business swelled by 50%+ in 2020, and taxes soared. Lol, no, it means those paid by its staff Amazon says turnover from business "activities" in Britain went up by more than 50 per cent year-on-year during 2020, but the profit the organisation generated locally is again typically unclear. As with 2019 financial figures, the online retail and web services biz that until recently was led by the richest man in the world, …
They could fix that law pretty easily. A "small company" should not only fit the existing criteria, but should be excluded if it takes its management direction from a larger company that owns it.
i.e., you're a small company if you have a sole owner, partnership, or multiple shareholders (or board responsible to them) controlling your management direction. You aren't a small company if you are directly owned by another company unless that direct owner also qualifies as a small company.
Our Chancellor's father in law is quite involved with Jeff Bezos, you can read for yourself:
The Mystery of Narayana Murthy's Retail Biz
This means, in my opinion, we are unlikely going to see any action towards Amazon.
Tax is payable on profit not revenue, so the £4.847bn revenue number is just an irrelevant number as far as direct taxation is concerned. Amazon UK's interestingly low tax rate is mainly down to it reinvesting most of its income to grow the business. In this case it ploughed £1.6bn into its operations network and infrastructure. That left them with a profit of £127.8 on which corporation tax at 19% would be a maximum tax bill of £24.3 million. Getting that down to £9.2 was certainly creative and worth a look too see how they did it, but at the end of the day its only that £15 million difference under discussion.
Amazon UK's interestingly low tax rate is mainly down to it reinvesting most of its income to grow the business.
Encouraging a business to grow is normally a good thing and to be encouraged. When something grows to the size of Amazon and behaves in predatory ways: it is not a good thing. Amazon needs to be curtailed before it kills more other businesses - that cannot compete because of how Amazon behaves.
Governments need to act to clip the wings of behemoths to preserve healthy competition.
But, as we know, this won't happen. Big Corp has Big Lobbyists to help Big Government leave them plenty of Big Tax loopholes.
This is actually what the government wants, because most corportist capitalist societies have spent many, many decades forwarding pro-business agendas - they have (almost) never met a incredibly profitable business that they didn't like.
As long as it creates jobs, no matter how menial (a la Wal-Mart), and large profits that drive large Wall Street dividends, your / my / their governments are ecstatically happy, because the supply chain, Wall Street, the banks, the investors and the suckers "customers" are "happy".
"Encouraging a business to grow is normally a good thing and to be encouraged. When something grows to the size of Amazon and behaves in predatory ways: it is not a good thing."
Funny how government goes out of it's way to provide these very large companies special tax breaks and other benefits so they will build another facility or locate a headquarters building. This same batch of public trough feeders don't take into account the costs to support all of the new people that will have to locate to the area around the new facility that's been sat in the middle of an area that's had nothing like it before. Things such as waste water treatment and the cleaner water ahead of that. Additional police, fire and EMT services. More roads and road maintenance. etc etc.
The "bad" behavior is being reinforced by the people that should be providing some discipline.
As a footnote. I don't approve of the way Amazon does business so I don't purchase anything from them. I've never found an item that wasn't available from another company at a very similar price.
Corporation Tax for big corporations is largely voluntary, because they can shift profits around and declare only as much as they think they can get away with.
That's why we have something called Diverted Profit Tax, that is set higher than Corporation Tax to tackle such issue. Unfortunately, this is rather a discretionary instrument for HMRC and they seem to more preoccupied by chasing pennies.
The problem is the creative corporate structures designed to book revenue and expenses in high tax regimes so there are token profits (to limit outrage and allow then to say they pay some tax).
Then the low tax areas book particularly high profits.
Amazon pay exactly as much tax in Britain as they want to be seen to.
Sure, but Amazon Web Services reported total revenue of £127,000 + an additional £49,000 for "Recovery of Asset Previously Provided Against" - ie they sold some old server kit on eBay or got an insurance pay-out for it.
Do you really seriously believe that AWS's total UK income is this low?
For starters, I read this set of accounts on an S3 bucket that Companies House uses to host their document images. How much do they pay per year for that? One news report I read suggests it is £5m over 3 years, and HMRC pays £94m.
It's relevant in so far as is it the only number they usefully publish.
We can make educated guesses as to profit margins that other retail businesses manage to sustain, amazon aren't exactly cheap, so their margins on retail are likely to be similar - though obviously have the whole hiring a computer business as well, which complicates matters.
The reason that turnover and profit bear so little relation is that there are obscene internal costs designed to siphon profit out before it's taxed (i.e. licensing the amazon brand name and "web technologies").
They're not the only ones to do this of course: https://www.theguardian.com/technology/2016/feb/18/amazon-the-obscure-subsidiary-at-the-heart-of-us-and-eu-tax-disputes
But to try to claim VAT collected as tax paid, and to claim income tax from employees as tax paid is stretching the definition of "paid" well beyond breaking point.
It almost seems to me that this is an almost annual affair ... :-(
Next it'll be Dame M-H complaining Amazon don't pay enough.
Then Amazon saying "yes we do because we're lovely"
Then HMRC saying "give us some money (if that's ok with you Mr Bezos)"
The Government will explain how they're actively looking into appointing a top Civil Servant (only named as Sir H.) to form a committee with the remit of looking into the feasability of setting up an investigative committee into looking at corporate tax avoidance ...
And Bezos will continue to line his pockets.
I have no objection to companies only paying tax on the basis of a level playing field. But the mine field of the tax system has mud, hills, holes, tenches, bunkers, vaults and complete subterranean tunnel networks which can be used by the super-wealthy in ways not available to smaller companies.
If the system continues to be deliberately skewed in favour of the super-wealthy, that is a system sailing dangerously close to state sponsored corruption.
"And Bezos will continue to line his pockets."
Jeff is a big lightening rod, but if you look at his salary before he stepped down in July, it wasn't that grand. I expect that his "compensation" was a lot more, but the bulk of his wealth is due to stock price. It's all of the gamblers that have overpaid that have made him as rich as he is. Personally, I don't begrudge him his wealth. He had an idea that he pursued until it made lots of sales. For many years it didn't make anything. A quick glance at their US tax filings looks to me like they make a bit less as a percentage than many retailers and make it up in volume. Paying low wages and relying on workers being able to get public benefits is problematic.
Again, Amazon has done no more than use the instruments legally available to keep its tax bill down.
If you don't like what Amazon does, change the [expletive deleted] law rather than whinging that companies should do something the law doesn't require them to do.
OK, let the down votes commence.
The problem is part of the money not spent in taxes are used to lobby against changing those laws... although probably the clock is ticking - the pandemic means States need to spend money and those money can no longer come from SMBs and and the middle class only.
It's not so much about the law, but the lack of enforcement. Our institutions like SFO that are supposed to fight corruption are essentially a laughing stock.
You can have any political option you want, but if corruption goes unchallenged, then there is no point to vote.
The trouble is that this is an international problem. An individual country can try and put things into place to get a more appropriate tax settlement but all these outfits will do is just engineer more of a loss. Profit shifting is a major issue that cannot be tackled unilaterally.
The outcome is loads of navel gazing and sod all real action whilst overall tax revenues for most countries reduce.
Have you tried? It's very difficult to find a product that is not made in China. Then chances are that you find one, when you open it up, all signs will suggest it was actually made in China, but at best boxed in a different country.
I couldn't find an online store that would let you filter by country of origin - perhaps that is something we should start writing to MPs about.
"Have you tried? It's very difficult to find a product that is not made in China"
Too true but there are still many things that aren't made in China. I'm a big believer in "reduce, recycle and reuse". I often find that many older tools are much higher quality so most of what I have was bought second hand. I'm also happy as a clam to spent an afternoon in the shop cleaning and fixing something so it's better than new when I'm done. The prerequisite is that it was of high quality to start with. That makes it worth repairing. On the flip side, I try to find good homes for the things I no longer need. My aunt gave me a refrigerator and microwave that I put in my shop and when I shut down, I gave them away to a young newly married couple just getting started. It put a smile on my face that I was able to help somebody while at the same time keeping perfectly good appliances out of landfill.
Didnt Dame Margaret Hodge write that awful book a while ago? I wouldnt be surprised if its still sat in the 'cheap books to buy' section at the library I donated it to after reading less than half of it.
Would the gov prefer Amazon to not be around to pay so much tax? Would the workers not want Amazon around so they dont have a job? Would the customers prefer Amazon to leave? Didnt think so.
@codejunky “Would the gov prefer Amazon to not be around to pay so much tax?”
Yes, if it meant the return of local companies that Amazon has displaced who would pay more tax collectively because they do not shift profits out of the UK.
“Would the workers not want Amazon around so they dont have a job?”
They would not care they would have jobs with someone else. Amazon don’t create jobs they just shift them from other companies. The employment rate has not changed that much since Amazon arrived.
“Would the customers prefer Amazon to leave?” They would not care they would buy elsewhere.
@Falmari
"Yes, if it meant the return of local companies that Amazon has displaced who would pay more tax collectively because they do not shift profits out of the UK."
Doubt it. Small businesses with higher prices and lesser service. Not to forget that faster cheaper service being a great benefit to other businesses and so the economy.
"Amazon don’t create jobs they just shift them from other companies"
And why? If the other companies are so great why cant they compete? What is it that drives the customer to Amazon?
"They would not care they would buy elsewhere."
Then why dont they? I expect customers are happy with the service and lower prices and the knock on effect of reduced prices outside of Amazon to compete.
"Again, Amazon has done no more than use the instruments legally available to keep its tax bill down. It does, however, rankle the feathers of some British businesses that have to pay their fair share."
All entities pay what is required if they want to avoid paying large fines and penalties. A publicly traded company is, by law, required to use every legal means possible to maximize value to the shareholder. To say "fair share" is a ploy to play on emotions our parents tried to instill in us as children. There is very little meaning to the word "fair" in the real world. Companies are more concerned with the word "legal". If treating their customers fairly costs money, they won't. If they have to treat customer complaints a certain way to avoid being charged in lawsuits, that's what they will do as it could cost them lots of money if they don't.
If definitions in the tax code can ever describe anything related to Amazon as a small trader, that tells you a lot about the government hacks that wrote the code. It also points to a very good place to start making corrections to the code. The article had to go through a bunch of explanations to illustrate what's happening that again makes it clear the problem is in the tax code.
Adding more taxes to pursue companies perceived to be gaming the system will only add another level of complexity to the game. It could be time to start from square one again. Let's say that any entity doing business in the UK, must be organized in the country as an independently operated company. They could be prohibited from selling the UK company products from the operating unit of another country at an inflated price to shift the profits to that other unit. If an audit shows that a product's cost is inflated anymore than necessary to account for shipping and complying with local quality standards, the company will be assessed tax on that difference plus a penalty. It can be made even more painful if a random sample of products show a 10% padding, that 10% would apply to the entirety of sales without a comprehensive audit of all products. I pulled the 10% number out of thin air. I couldn't say that doing business in the UK might actually cost 10% more than in another part of the world.
Yes, yes, we get it, Hitler was right :/
You people are utterly vile. Amazon pays the taxes the system intends them to pay. They are not 'avoiding' anything. Taxes are charged on profits, not turnover, and that's not a loophole.
This is some _literally_ Nazi propaganda. Go fuck yourselves backwards with a sheep, you scum.
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