16 May 2013

Amazon pays less corporation tax than it got in grants

The UK arm of internet shopping giant Amazon received more money in government grants than it paid in UK corporation tax in 2012, according to new figures revealing the internet giant’s accounts.

Amazon's tax bill and government grants revealed (G)

Amazon’s UK subsidiary paid £2.4m in corporation tax in 2012, but it has received almost the same amount of £2.5m in government grants during the same period.

The company has previously said it made £4.26bn in sales to British customers.

Details of the American firm’s accounts were revealed in filings at Companies House and emerge as the group is due to be quizzed again by MPs about its UK tax bill. The revelation follows public outrage over the tax paid by other multinational giants including Starbucks and Apple.

Representatives from all three companies were grilled by MPs in November, and chairwoman of the public accounts committee, Margaret Hodge, said she plans to haul Amazon back to explain its financial dealings.

Google vice president Matt Brittin is also due to appear before the Commons committee on Thursday.

Amazon received grants of £2.5m from Scottish Enterprise, part of the Scottish government, to develop its operations in Scotland and create more jobs.

When questioned by MPs , Amazon said that the company earns its profits in Luxembourg, its European headquarters, and is therefore not obliged to pay any more tax than it already does.

The Amazon group had told has investors its 2012 UK sales were £4.3bn, according to a Reuters investigation.

MPs: ‘real concerns’

Ms Hodge said: “My committee has real concerns about the extent to which companies like Amazon are stretching the rules in order to avoid paying their fair share in tax.

“By any measure of common sense Amazon appears to have a proper established presence in the UK, and there is a discrepancy between some of the evidence in this report about its activities in the UK and what the committee was told by Amazon when they appeared before us last year. We will now consider whether we need to recall them to explain that discrepancy,” she told the Guardian.

In a statement Amazon said it pays all applicable taxes in every jurisdiction it operates within: “Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites in a number of langueages dispatching products to all 27 countries in the EU. We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation.”

A damning report by the Commons committee, published in December, accused Amazon, Google and Starbucks of “immorally” minimising their UK tax bills.

The firms were criticised for the “unconvincing and, in some cases, evasive” evidence they gave on why their corporation tax payments were so low.

Amazon’s accounts show the firm had 4,191 UK staff at the end of 2012.

A spokeswoman for tax avoidance campaign group UK Uncut said: “It’s an absolute disgrace that Amazon is paying such tiny amounts in tax.

“The government should be clamping down on tax avoidance rather than slashing the welfare state, privatising the NHS and cutting legal aid for ordinary people.

“This shows us yet again that the Government is making a political choice rather than an economic necessity.”

Amazon said: “Amazon pays all applicable taxes in every jurisdiction that it operates within. Like many companies, Amazon has received assistance in relation to major investments in the UK.”