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Amazon is in the news again, as it only paid £2.4 million in tax in the UK last year, on sales of £4.3 billion. This is only slightly up on the £1.8 million it paid last year – something I mentioned in my Boycotting Google blog post in December. It means that Amazon effectively paid less than 0.1% tax, and it actually received government grants totally £2.5 million so it effectively paid nothing.
What Amazon doing is not illegal. ‘Avoiding’ tax by exploiting loopholes (as opposed to ‘evading’ tax) may be seen as morally wrong, but it isn’t illegal. Most of Amazon’s business is channelled through Luxembourg where the rate of corporation tax is lower – around 22%, rather than 28% in the UK (according to taxrates.cc). Other companies like Google and Apple channel their profits through Ireland, where the corporation tax rate is only 12.5%.
I don’t want to defend Amazon but I do have a couple of issues with how the news has been reported. Firstly, £2.4 million is still a lot of money, and far more than what most people will see in their lifetime. I’m pleased that the article states this as a percentage but it would be nice if stated what the normal corporation tax rate is.
Secondly, what would be better is if someone could calculate what Amazon should be paying if it was a wholly UK-based operation. I’m assuming it should be around £1 billion, which would be a nice windfall for the exchequer.
Of course, none of the loopholes that Amazon, and others, are using should be allowed. The government are making the right noises but more needs to be done. It’s not fair that big, multi-national companies can get out of paying their taxes when smaller have to pay.