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Amazon UK business swelled by 50%+ in 2020, and taxes soared. Lol, no, it means those paid by its staff

Jeff Bezos founded biz at the 'apex of the Big Tech tax avoiders'

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, outlined in a blog its latest full fiscal-year contribution to the British economy ahead of filing documents at Companies House, the local company repository.

The megacorp cheerfully boasted of total revenues for all of its UK "activities" standing at £20.63bn versus £13.73bn in the prior year. No divisional breakdown was given.

As for the nitty-gritty of "direct" taxation? All sorts of elements were lobbed together in a way that seems designed to obfuscate what Amazon actually paid to Her Majesty's Revenues and Customs: direct taxation was £492m, up from £293m a year earlier, Amazon said.

Included in this payment is the Digital Services tax - the one Amazon offset by increasing fees for third party sellers that use its platform - as well as business rates, corporation tax, and other things like Stamp Duty Land tax and Import Duties. The rise, said Amazon, pertained mostly to "headcount growth, the expansion of our real estate footprint and sales growth".

Not content to leave it there, Amazon talked up the indirect taxes it collected of £1.06bn, versus £854m a year earlier. This was "driven by net VAT due to an increase in sales, and an increase in employee taxes".

Ah, that old chestnut. It didn't end there, lest we forget the collection and payment of VAT in the UK of the aforementioned third party sellers that ply their trade via Amazon's digital souk.

So all in all, Amazon was keen to tell us it actually contributed £1.55bn in taxes compared to the £1.1bn it said it paid in 2019.

Amazon said it was "proud of the significant economic contribution we are making to the UK economy" as it pumped another £1.6bn (up from 2019's £690m) into its operations network and infrastructure.

Like many tech companies, Amazon runs a complex web of trading entities and many of these report to the group's operations based in Luxembourg where the tax jurisdiction is more favourable.

Parts of the operation do file local accounts, but the generally provide little information. Results for Amazon Web Services UK Ltd, for example, used the "small companies exemption from preparing a strategic report."

"On July 2018, the Company transferred its workforce, lease and all related assets and liabilities to a group undertaking. The principle [sic] activity, which ceased upon transfer of workforce, was the provision of customer services, marketing and promotional services to group undertakings," the accounts state.

Amazon's UK Services limb - which provides only fulfilment and corporate support services to other Amazon group undertakings - also lodged its accounts. The taxes documented therein are, however, unlikely to put a smile on HMRC's face.

In the filing for the year ended 31 December 2020 [PDF], Amazon UK Services Limited reported an impressive leap in revenues, from £2.959bn in 2019 to £4.847bn. Profit before taxation similarly climbed, from £101.9m to £127.8m. However, the tax on profit went from £6.3m to £9.2m.

Deferred tax increased from £8.1m to £9.1m, nearly halving the tax on Amazon's profit, although by a smaller proportion than in the previous year.

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.

The Register asked Amazon for comment and regarding the company's tax contributions, a spokesperson reiterated the remarks made in the company's blog:

"Most governments – including the UK government – actively encourage companies to make investments in infrastructure and job creation, and they often use the taxation system to do so. Capital allowances and R&D credits are designed to stimulate the kind of investment necessary to grow the economy and create jobs. These reduce corporation tax, however this is more than made up for by the increased tax revenue or lower costs for the government in other areas."

The UK government and those of other countries around the world are, at least, paying lip services to cracking down on tax avoidance. Hence the, er, Digital Tax. Until there is a more collaborative approach, companies will continue to legally exploit the current tax rules.

Dame Margaret Hodge, Labour Member of Parliament and a fierce critic of companies she believes don't pay their way in society via tax, told us:

"Amazon is at the apex of the Big Tech tax avoiders. As these latest accounts show, the online retailer and digital giant has seen its revenues soar under the pandemic as people turned to shopping online. Yet Amazon's corporate tax payments have barely risen [according to Amazon UK Services accounts].

"Most individuals and small businesses pay their tax without question and on time. It's high time that huge corporations like Amazon do the same and start paying a fair share of tax." ®

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