Amazon pays a third less UK tax despite bigger profits

AMAZON paid less corporation tax in the UK in 2017 even as it increased revenues and profits from its operations.

The company’s UK logistics arm, Amazon UK Services, paid just £4.6m in tax in the year ending December 2017, down from £7.4m the previous year, according to a filing from Companies House. The lower payment to HMRC comes despite an increase in operating profit at the tech behemoth.

Amazon’s UK operating profit grew to £79m, up from £26m the previous year. An Amazon spokesman said the company pays all taxes required in the UK.

Amazon made around $11.6bn (£8.9bn) in revenue from its non-us business in 2017, although it recorded a small loss according to US regulatory filings. It reported record global profits in its last earnings report to Wall Street at the end of July.

Amazon UK Services only accounts for the company’s warehouse and logistics business, which it now says employs almost 20,000 people. The UK arm made revenues of just under £2bn.

Amazon has launched a series of headline investments in the UK in the past year, opening a new head office and it is expected to grow to 27,000 workers by the end of the year.

The low taxes are likely to fuel dismay among small businesses and high street retailers at a time when they are being squeezed by increased business rates. Amazon pays lower business rates due to its online operation.

In a separate filing, the latest set of accounts for Amazon Web Services (AWS), Amazon’s cloud and internet business, revealed the company had increased its revenues to £99m for 2017 in the UK, up from £53m the year before. It paid taxes of £1.3m on profits of £5m for AWS.

The cloud business also almost doubled in size, employing 439 people compared to 244 the year before.

While Amazon’s tax in the UK is low, it is able to divert some of its profits through its employee share scheme. This means employees can be paid in share options instead of Amazon paying cash to tax authorities. Amazon’s increased share price can also serve to reduce its tax exposure. The Government has said it will be targeting tech giants like Amazon, Facebook, Google and Apple, with plans to begin taxing UK revenues of the businesses, rather than their profits.

“The Government’s view is that the tax system has not kept pace with these changes and that action is needed,” a government paper stated in March. “The current misalignment between where digital businesses are taxed and where they create value threatens to undermine the fairness, sustainability and public acceptability of the corporate tax system.”

This week, HMRC said it would appoint Jason Furman, one of the top economists in the Obama administration, to lead a review of the UK’S tech economy over fears by US giants.

Amazon said it pays all taxes required in the UK and in every country it operates. Since 2015 it has had a branch of its EU business in the UK to pay taxes on retail profits.

An Amazon spokesman added: “Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive.

“We’ve invested over £9.3bn in the UK since 2010, including last year opening a new head office in London alongside development centres in Cambridge and London.” it is being dominated