Amazon UK has revealed its corporation tax bill dropped to £4.5m last year despite their pre-tax UK profits soaring to £72m last year meaning it would have had an effective tax rate of 6.25%. The corporate tax rate currently is 19%.
However, despite having a bill of £4.5 million, it only paid £1.7m in tax. An effective tax rate of 2.4%.
Amazon’s tax bill should have been close to £14 million. It received a tax credit of £1.3m from the UK authorities in 2016.
Amazon UK only handles the packing and delivery of parcels and functions such as customer service, the revenue and associated prices for retail are processed in Luxembourg and therefore avoid tax from the British government. Revenue from UK sales hit $11.3bn last year.
It’s reduced bill comes partly due to employee ownership of stock.
Amazon has recently moved into the public sector providing items like office supplies and medical equipment to Yorkshire’s schools, social care providers, local government and emergency services across 13 local authority areas in a deal worth £600m.
Amazon lost out to Apple in the race to become the first corporation to reach $1 trillion in value.
Analysis from Iwan Doherty- Editor in Chief
Yet another story of crony capitalism. Though is there any other type of capitalism?
Many may see Amazon and Google’s minimal tax returns as a sign of an administration that is corrupt and the fault lies in government, not in the corporations. And whilst the Conservative Party are very happy to look the other way whilst corporations don’t pay their fair share, and hand out huge welfare checks to companies who treat their workers like animals, it is naive to think allowing single individuals like Bezos to have such economic power, in a system where profit is king, will not result in corporations breaking our rules.
The fact the government can’t get them to pay their greatly reduced bill is a sign of where power lies in our capitalist system. 2% whilst workers on average pay over 10x that amount.
Would Corbyn’s Labour stop such tax avoidance? They might change the rules, beat such companies for a bit, but with the civil service and the private sector being divided by a revolving door the sad fact is capitalism is always crony.
The government can do more to halt tax avoidance. When the average Brit can uncover how these companies avoid tax it can’t be that hard to stop but corporations are at fault, and the solution lies in replacing them.
Encouraging co-operatives, worker-run companies, is the solution to our two-speed tax system. In Germany, there is both a thriving co-op and corporate banking sector. The difference between the two sectors is shown clearly in tax receipts. For every one billion in assets, German co-operative banks pay 2.5 million in taxes, compared to big private banks that pay only 0.5 million. Encouraging co-ops who have the morality of workers, not corporates, could be a key step in helping our public sector.