£38bn sales...how did Amazon pay no corporation tax?
BENJAMIN Franklin, one of the founding fathers of the United States, famously declared that “in this world, nothing is certain except death and taxes”. But that is not true in the case of the tech giant Amazon, whose colossal impact on global commerce is not matched by a willingness to face up to its consequent financial responsibilities.
In an extraordinary report out this week, it was revealed that the European arm of the mighty online retailer paid no corporation tax at all last year, despite record-breaking sales of £38billion fuelled by the surge in internet shopping during the Covid lockdowns.
Indeed, far from using its unprecedented revenues to assist battered governments around Europe in the crisis, the company exploited its complex web of accounting procedures to receive a payout in the form of a tax credit worth £49million.
Whatever the hardships that ordinary citizens have endured, the pandemic has been good for Amazon. In Britain alone, its income soared during this period by 51 per cent to £19.4billion, roughly double the takings of M&S.
Yet by channelling all its European earnings through the tiny tax haven of Luxembourg and by claiming massive losses of over £1billion, Amazon had no corporation tax liability whatsoever in Europe.
THAT can only be described as a bizarre outcome which inverts common sense and morality. It is absurd that many sole traders and small businesses in Britain will have paid more company tax than one of the world’s largest, richest firms.
It must be admitted that Amazon is an astonishingly efficient, innovative organisation which has revolutionised commerce. Nor is there any suggestion that, in its tax affairs, it has done anything remotely illegal. Yet its ruthless approach could be described as unethical. As veteran Labour MP Margaret Hodge, a fierce critic of manipulative accounting by the digital giants, said of the latest figures, “it seems that Amazon’s relentless campaign of appalling tax avoidance continues.”
She is right, though Amazon is hardly unique in its self-interested stance. In late April, it was revealed that last year Google’s British operation paid just £50million in corporation tax on sales totalling £1.8billion, up from £1.6billion the previous year. “Despite the UK providing significant growth for the company, the resulting taxable profits remain pitiful,” argued the Tax Justice Network.
Last December it was reported that Facebook in the previous year paid £28.5million in British corporation tax, despite a record £1billion in sales, while in July 2020 Apple registered a UK turnover of £1.37billion, which only produced a measly company tax payment of £6.2million. Like Amazon, these global companies have flourished in the pandemic.
ONLY last week, for example, Microsoft in the USA reported a 50 per cent increase in business revenues during the first quarter of 2021. But that makes it all the more important that they accept their financial duty. After all, in every country where they operate, they benefit from publicly funded education systems, transport networks, civic infrastructures, and employment support.They should reciprocate by paying their share of taxation.
Unfairness is compounded by hypocrisy. While avoiding their financial burden, they blather about their commitment to
social responsibility, reflected in their embrace of the fashionable woke agenda and their funding for their chosen pet projects. “We look for ways to amplify under-represented voices and empower diverse communities,” boasts Amazon.
But Amazon’s much trumpeted “culture of inclusion” does not seem to include paying a proper share. Nor can philanthropy or social justice activity offset taxation. No individuals would be allowed to slash their bills by telling HMRC about their generosity to the RSPCA.
The scale of tax avoidance is all the more aggravating, given the enormous, increasingly monopolistic, power the tech giants now wield. Despite the absence of any democratic mandate, they increasingly act like our overlords as they dictate public policy, crush competition, enforce the progressive orthodoxy and indulge in censorship.
They need to be made far more accountable. One key way to achieve that would be through the introduction of a tougher tax regime whose demands incorporate a real assessment of their turnover and revenue. Such a step will require action in Britain and coordination around the world.
But as Amazon’s startling results demonstrate, it is urgently needed.
‘Culture of inclusion does not seem to include paying a proper share’