HMRC slammed over offshore Amazon deal
THE taxman has awarded £22m of contracts to an arm of Amazon based in tax haven Luxembourg, the Daily Mail can reveal. HM Revenue and Customs (HMRC) is using Amazon Web Services Emea Sarl to provide IT support until 2021 under the terms of the agreement – despite controversy over its tax affairs.
The revelation is an embarrassment for the Government, which has repeatedly pledged to crack down on Amazon’s tax arrangements.
In 2016, Prime Minister Theresa May said: ‘It doesn’t matter to me whether you’re Amazon, Google or Starbucks, you have a duty to put something back. You have a responsibility to pay your taxes.’
But, since that speech was made, the Government has revved up contracts to the offshore firm, reducing HMRC’s takings.
HMRC said the contracts were with a UK arm of the Luxembourg-based company but refused to comment on Amazon’s tax affairs.
The HMRC contract is just one example of a string of such deals awarded by public bodies to AWS, a lucrative business which now brings in more than half of Amazon’s annual profits.
In all Amazon has bagged more than £660m in UK public contracts since 2015. This includes deals with HMRC worth £15m in 2018/19 and £22.2m overall.
Amazon Web Services Emea Sarl paid £ 9.2m in tax last year and made £ 1.7bn in revenues.
George Turner, of Tax Watch UK, said: ‘Tax avoidance has been central to the Amazon business model for many years. Rather than rewarding companies like Amazon with large government contracts, HMRC should be working hard to make sure that large multinational companies pay their fair share of taxation.’
Prem Sikka, a professor of accounting, said: ‘HMRC is using public money for something that ultimately undermines the tax base.
‘ The Government should use the tools it has at its disposal to combat tax avoidance – and that includes not awarding public contracts to organisations engaged in tax avoidance.’ Amazon, founded by Jeff Bezos ( pictured), is best known as an online retail business, but in recent years has moved into cloud services and data storage. Now Amazon Web Services is by far the company’s most profitable venture - making up nearly 60pc of its £10bn operating profit in 2018. AWS Emea Sarl has a branch in Britain but does not publish any accounts there. Profits this division makes are funnelled back to Amazon’s parent firm in America through Luxembourg. Oxfam has described Luxembourg as being among ‘the most powerful tax havens in the world’. Amazon declined to comment.