Amazon: still quite dodgy taxwise

27 May 2014

amazon logo Tax shirking online retailer Amazon is facing fresh new claims that it has been shirking tax again.

This claim comes after the company's latest accounts showed that more than £11 billion went through its Luxembourg-based subsidiary in 2013, but only shelled out £4 million in UK corporation tax last year.

Amazon trades through the Lux subsidiary Amazon EU SARL as to help reduce its UK tax bill.

When you buy that cookbook or even that elderly copy of Hits 8 on double cassette, your payment is channelled through Luxembourg, who in turn pay the UK branch a fee to deliver.

In the UK, Amazon has more than 5,000 employees, yet benefits from Luxembourg's extremely low corporate tax rates. The strategy is legal but Amazon has faced fierce criticism from rival retailers, politicians and consumers over the amount it pays to HM Revenue & Customs in the UK.

That £4m that Amazon pays is barely a a percent of the £4.3bn sales the company chalks up each year. If that doesn't sound a bit hokey, Amazon also claimed a £4m tax rebate from the Luxembourg Government too.

Unsurprisingly John Lewis and other high street clarts have attacked Amazon's accounting tactics, which they say give Amazon an unfair advantage by using the Luxembourg loophole to shield its profits from the UK taxman.

Amazon, Google and Starbucks have long been on the "Hey, pay yer tax you arses" list, and seem quite happy to stay. A lot of hippies are going to be doing a lot of protesting, eh readers?

2 comments

  • Han S.
    "The strategy is legal" - Then why blame Amazon? Change the law if it's not working as intended
  • Mark W.
    If the only purpose of a structure like Amazon's is to avoid tax, then I can't see why HMRC doesn't act. However, the Government can hardly complain when it's cut so many civil service jobs that the department has nobody to investigate things. Perhaps the SFO should intervene instead.

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