Amazon UK corporation tax bill falls to £4.6m


Amazon had a £4.6m corporation tax bill in the UK last year, down from £7.4m in 2016, its accounts reveal.

And the figures for Amazon UK Services Limited show the online retail giant paid just £1.7m in tax, after deferring £2.9m.

Its UK operations made an operating profit of almost £80m, up from £48m in 2016.

An Amazon UK spokesman said it paid all the tax it was required to “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.” he said in a statement.

Amazon UK Services is the division which runs the fulfilment centres which process, package and post deliveries to UK customers.

It employs more than two-thirds of the 27,000-strong UK workforce.

Turnover for Amazon in the UK jumped from £1.43bn to nearly £1.98bn as the Seattle-based giant attracted more customers to its online shopping and entertainment offerings.

Share-based payments for staff rose from just under £37m in 2016 to almost £55m last year – which contributed to the lower tax bill.

The figures come just days after Amazon internationally reported record quarterly profits of $2.53bn (£1.9bn) for the three months to 30 June.

The profit was about 12 times more than Jeff Bezos’s company made during the same period last year and reflected rising sales and demand for its cloud services.

Amazon reports its revenues from UK sales through a separate company based in Luxembourg.

The £1.98bn figure is a charge reported by Amazon Services UK to the parent company for the cost of making deliveries to customers.

According to its US filings, UK revenue rose almost a fifth to $11.3bn last year.

Rebecca McVittie, investment director at Fidelity International, told BBC Radio 4’s Today programme it is “indicative of how tax policy hasn’t moved on”.

“The world has evolved very quickly, technology giants have this hugely dominant role and popular role with consumers and in many respects, what we see in the headlines today, I think there should be more reflection on the need for digital taxation.”

However Chris Denning, head of corporation tax at accountancy firm MHA MacIntyre Hudson, thinks that we should be looking at this very differently saying: “Without getting into arguments about whether online shopping, where Amazon is a key player, is killing the high street, it appears the reporting around the UK entity’s 2017 results is somewhat unbalanced.

“While the merits of Amazon’s sales structure though a Luxembourg principal are questionable, the government is looking to address this, consulting and working with other tax authorities and relevant bodies, such as the OECD, on introducing ways to tax digital businesses selling remotely into the UK. In addition, avoidance measures such as the diverted profits tax legislation have been introduced to encourage multi nationals to recognise a more reflective level of profit in the UK in respect of their UK activities.

“Notwithstanding the above, the furore around the UK subsidiaries results seems to skate over the fact that the company has probably paid more tax to the UK exchequer in 2017 than in the previous year.

“It can be seen from the accounts that headcount has gone up significantly, resulting in a significant increase in pay-as-you-earn tax (PAYE) and national insurance contributions (NIC). The increased headcount may have been as a result of Amazon (purportedly) moving more function and risk to the UK, in response to the possibility of diverted profits tax rules applying, which is obviously positive for UK plc.

“The main reason the corporation tax bill is low is because of the deduction for share based payments. These are unapproved arrangements, therefore subject to UK income tax and again will have resulted in significant amounts of PAYE and NIC, far in excess of corporation tax on the same amount of profit.

“The constant negative focus on the level of corporation tax multinationals pay in the UK always fails to take into account that the UK’s low rate is a hook for multinationals to locate function, activity and risk in the UK, which means they employ thousands of people as a consequence.

“While it’s always overlooked that corporation tax is a relatively small proportion of the UK’s total tax revenue, at around 7/8 per cent, it is a key fiscal tool in attracting and encouraging investment into the UK.”