Amazon UK halves its corporation tax bill despite increased turnover

Retail giant Amazon halved its corporation tax bill in the UK to £7.4m in 2016, a reduction from £15.8m in 2015.

This is despite the fact that Amazon UK Services, the subsidiary responsible for the running of warehouses, packaging and transporting goods, increased turnover from £946m in 2015 to £1.46bn in 2016, an increase of 54%.

Amazon refuse to disclose their overall UK tax bill and revenue but released these figures in the financial statements of the Services branch. Overall UK revenue figures are funnelled through a separate company in Luxembourg, and aggregated as part of its overall European operations. An Amazon spokesperson claimed that although not publicly disclosed, its total tax figures are reported to HMRC.

The Guardian reported that in its US filings Amazon revealed that UK revenues reached £7.3bn ($9.5bn) last year.

Amazon received a tax rebate of £1.3m from UK authorities, which it can deduct from future tax bills. This tax credit was received due to a series of deductions, including £36m of share awards to managers and staff. Through these share awards, Amazon’s pre-tax profit fell to £24.2m in 2016 from £48.5m in 2015.

The retail giant is fielding criticisms around lack of transparency in disclosing revenues and tax contributions, as well as being panned for not paying their “fair share” of tax.

A spokesperson for Amazon UK said: “We pay all 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.”

Amazon stand by the assertion that their lowered profits should be viewed positively as they are due to heavy investments in the UK –  worth £6.4bn since 2010. Just last month Amazon announced plans to create 5,000 more jobs in the UK, bringing their total number of UK employees to 24,000, alongside plans to open more UK warehouses and a new London head office.

The revelation of Amazon Services UK’s reduced corporation tax bill has been condemned across parties in the UK. Tory MP Charlie Elphicke commented on the corporation tax figure to The Sun: “It’s peanuts. People will say it’s high time Amazon paid their fair share.”

Also speaking to the national paper, Margaret Hodge of Labour was more vitriolic in her commentary, as she stated: “It remains outrageous that Amazon are so blasé that they can ignore all the anger that their failure to pay fair tax in this country.”

“It is a scandal they are deliberately manipulating the way they do their business for no other purpose than to avoid tax.” She went as far as to call for a boycott of Amazon services.

Leader of the Liberal Democrats Vince Cable joined in condemnations of the company, echoing accusations that Amazon are manipulating the system. He said: “This is yet another example of how companies are taking the government for a ride and we’re going to have to look at the way we charge these companies tax. We need to shift the system so that we tax real activity and the business they do here.”

In 2015 Amazon pledged to eliminate controversial corporate structures that allowed UK sales and profits to be diverted abroad, following former chancellor George Osborne introducing a diverted profits tax.

Despite criticisms, Amazon continues to dominate the retail landscape and shows no signs of slowing down. Earlier this year it was reported that Amazon accounts for 43% of all online retail sales in the US, and last month CEO Jeff Bezos briefly overtook Bill Gates as the world’s wealthiest individual due to a surge in Amazon’s share price, but slipped back behind Gates soon after Amazon share prices fell.