Amazon’s key UK business paid just 3% more tax last year when profits rose by more than a third as the online retailer benefited from the switch to home shopping.
The group’s warehouse and logistics operation, which employs more than two-thirds of its 30,000-plus UK workforce, Amazon UK Services, said its corporation tax contribution was £14.46m in 2019, up from £14.03m the year before. Pretax profits at the division soared 35% to nearly £102m as revenues rose by 29% to nearly £3bn, according to accounts about to be published by Companies House.
Amazon said its tax bill had been offset by government incentives related to its investment in infrastructure as it caters to soaring demand for home shopping and IT services in the UK.
The group, which is led by multibillionaire Jeff Bezos, said its entire UK operation increased revenues by more than a quarter to £13.7bn last year after expanding its online grocery operation, IT services and its Prime subscription offer, which includes video and music streaming.
Building new warehouses, offices, data centres and other infrastructure to service its expanding UK business cost Amazon £690m during the year.
Amazon and other tech firms such as Google and Facebook have been criticised over their tax contributions as online businesses have enjoyed a boom time during the coronavirus pandemic while traditional high street operators – from Marks & Spencer to Pizza Express – have been forced to close outlets and lay off thousands of workers.
In April, it emerged that Amazon received €294m (£258m) in tax credits across Europe last year, as revenues at the online retailer rose significantly to €32bn.
“Amazon is growing its market domination across the globe on the back of income that is largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach,” said Paul Monaghan, head of the Fair Tax Mark campaign group. “Contrived financial arrangements lie at the heart of Amazon’s success.”
Amid anger from high street retailers, who say online sellers have an unfair advantage by not having to pay expensive business rates on physical premises in the UK, the government introduced a new digital services tax on revenues earned by social media services, search engines and online marketplaces, from 1 April this year.
On Tuesday, Amazon tried to fend off accusations of tax underpayment by issuing a statement which said its UK business as a whole paid out £293m in “direct taxes” – which includes employer’s National Insurance, business rates, stamp duty and corporation tax – up from £220m last year. At least half of those direct taxes are thought to be accounted for by national insurance and business rates.
“The UK has now become one of Amazon’s largest global hubs for talent and this year we announced plans to create 10,000 new jobs in the country by the end of 2020, ,” Amazon said in a statement.
“We pay all taxes required in the UK and every country where we operate, and focusing on one small piece does not provide a full picture of Amazon’s overall contribution to the UK. Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive, low-margin business and we continue to invest heavily.”
Amazon does not reveal profits or corporation tax payments for its entire UK operation, which include its retail business and IT services division as well as warehouses and logistics.
Amazon said in 2015 it would stop using controversial corporate structures that diverted sales and profits away from the UK.
But tax expert Richard Murphy said Amazon needed to provide more detail on its affairs before it was clear whether it was paying a fair amount of tax.
“If only they would give us basic information instead of a PR announcement with nothing meaningful in,” he said.