Amazon may escape new tax on tech

AMAZON could escape the Government’s new ‘tech tax’ as the internet giant’s profits are too low, according to analysis of documents released last week.

It was initially hoped the new tax, which is due to come into effect in April 2020, could help high street shops as they battle internet giants which are undercutting their prices.

The new tax, forecast to raise £450 million a year for the Treasury, was announced as part of the Budget, and the news coincided with a 5 per cent one-day fall in Amazon’s share price.

But Government consultation papers show the tax will aim to avoid hitting low margin business and having ‘disproportionate impacts on business sustainability’.

Richard Murphy, at Tax Research UK, said: ‘Anyone who thinks this is going to solve the problem of Amazon is whistling in the wind.

‘If there is a low profit get-out there is no way Amazon is going to be paying this tax as its profit margin is far too low.’

The Digital Services Tax Consultation said the taxman would target UK profit or ‘some measure of a group’s global consolidated profit margin’.

Amazon’s global turnover is $178 billion (£140 billion), but its profit is just $3 billion as it reinvests nearly all the money it makes into rapid growth, innovations and new products.

Treasury Secretary Mel Stride said he hoped the tax would ultimately be replaced by a comprehensive global solution.