Amazon UK business swelled by 50%+ in 2020, and taxes soared. Lol, no, it means those paid by its staff
- Reference: 1631880913
- News link: https://www.theregister.co.uk/2021/09/17/amazon_results/
- Source link:
As with [1]2019 financial figures , the online retail and web services biz that until recently was led by the richest man in the world, outlined in a [2]blog its latest full fiscal-year contribution to the British economy ahead of filing documents at Companies House, the local company repository.
The megacorp [3]cheerfully boasted of total revenues for all of its UK "activities" standing at £20.63bn versus £13.73bn in the prior year. No divisional breakdown was given.
[4]
As for the nitty-gritty of "direct" taxation? All sorts of elements were lobbed together in a way that seems designed to obfuscate what Amazon actually paid to Her Majesty's Revenues and Customs: direct taxation was £492m, up from £293m a year earlier, Amazon said.
[5]
[6]
Included in this payment is the Digital Services tax - the one [7]Amazon offset by increasing fees for third party sellers that use its platform - as well as business rates, corporation tax, and other things like Stamp Duty Land tax and Import Duties. The rise, said Amazon, pertained mostly to "headcount growth, the expansion of our real estate footprint and sales growth".
Not content to leave it there, Amazon talked up the indirect taxes it collected of £1.06bn, versus £854m a year earlier. This was "driven by net VAT due to an increase in sales, and an increase in employee taxes".
[8]
Ah, that old chestnut. It didn't end there, lest we forget the collection and payment of VAT in the UK of the aforementioned third party sellers that ply their trade via Amazon's digital souk.
So all in all, Amazon was keen to tell us it actually contributed £1.55bn in taxes compared to the £1.1bn it said it paid in 2019.
Amazon said it was "proud of the significant economic contribution we are making to the UK economy" as it pumped another £1.6bn (up from 2019's £690m) into its operations network and infrastructure.
[9]
Like many tech companies, Amazon runs a complex web of trading entities and many of these report to the group's operations based in Luxembourg where the tax jurisdiction is more favourable.
Parts of the operation do file local accounts, but the generally provide little information. Results for [10]Amazon Web Services UK Ltd , for example, used the "small companies exemption from preparing a strategic report."
"On July 2018, the Company transferred its workforce, lease and all related assets and liabilities to a group undertaking. The principle
sic
activity, which ceased upon transfer of workforce, was the provision of customer services, marketing and promotional services to group undertakings," the accounts state.Amazon's [11]UK Services limb - which provides only fulfilment and corporate support services to other Amazon group undertakings - also lodged its accounts. The taxes documented therein are, however, unlikely to put a smile on HMRC's face.
In the filing for the year ended 31 December 2020
[12]PDF
, Amazon UK Services Limited reported an impressive leap in revenues, from £2.959bn in 2019 to £4.847bn. Profit before taxation similarly climbed, from £101.9m to £127.8m. However, the tax on profit went from £6.3m to £9.2m.Deferred tax increased from £8.1m to £9.1m, nearly halving the tax on Amazon's profit, although by a smaller proportion than in the previous year.
[13]I've got way too much cash, thinks Jeff Bezos. Hmmm, pay more tax? Pay staff more? Nah, let's just go into space
[14]Amazon abuses dominance to keep wholesaler prices high, says DC AG in updated antitrust complaint
[15]Amazon Elasticsearch Service is so flexible it wants to be called by a new name
[16]Amazon to cover 100%* of college* tuition* for hourly employees* in the US
[17]Amazon delays return to office work until 2022 at the earliest
Again, Amazon has done no more than use the instruments legally available to keep its tax bill down. It does, however, rankle the feathers of some British businesses that have to pay their fair share.
The Register asked Amazon for comment and regarding the company's tax contributions, a spokesperson reiterated the remarks made in the company's blog:
"Most governments – including the UK government – actively encourage companies to make investments in infrastructure and job creation, and they often use the taxation system to do so. Capital allowances and R&D credits are designed to stimulate the kind of investment necessary to grow the economy and create jobs. These reduce corporation tax, however this is more than made up for by the increased tax revenue or lower costs for the government in other areas."
The UK government and those of other countries around the world are, at least, paying lip services to cracking down on tax avoidance. Hence the, er, Digital Tax. Until there is a more collaborative approach, companies will continue to legally exploit the current tax rules.
Dame Margaret Hodge, Labour Member of Parliament and a fierce critic of companies she believes don't pay their way in society via tax, told us:
"Amazon is at the apex of the Big Tech tax avoiders. As these latest accounts show, the online retailer and digital giant has seen its revenues soar under the pandemic as people turned to shopping online. Yet Amazon's corporate tax payments have barely risen [according to Amazon UK Services accounts].
"Most individuals and small businesses pay their tax without question and on time. It's high time that huge corporations like Amazon do the same and start paying a fair share of tax." ®
Get our [18]Tech Resources
[1] https://www.theregister.com/2020/09/18/amazon_uk_results/
[2] https://blog.aboutamazon.co.uk/jobs-and-investment/2020-amazons-economic-impact-in-the-uk
[3] https://blog.aboutamazon.co.uk/jobs-and-investment/2020-amazons-economic-impact-in-the-uk
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YUS7t-bhkQsO3sTI7B9zzQAAAE0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUS7t-bhkQsO3sTI7B9zzQAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUS7t-bhkQsO3sTI7B9zzQAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2020/08/13/ebay_not_passing_on_digital/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUS7t-bhkQsO3sTI7B9zzQAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUS7t-bhkQsO3sTI7B9zzQAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://find-and-update.company-information.service.gov.uk/company/08650665/filing-history
[11] https://find-and-update.company-information.service.gov.uk/company/03223028/filing-history
[12] https://find-and-update.company-information.service.gov.uk/company/08650665/filing-history/MzMxMzM2MjA2MGFkaXF6a2N4/document?format=pdf&download=0
[13] https://www.theregister.com/2018/05/03/bezos_billions_space/
[14] https://www.theregister.com/2021/09/13/amazon_antitrust_lawsuit_widened/
[15] https://www.theregister.com/2021/09/10/aws_elasticsearch_opensearch/
[16] https://www.theregister.com/2021/09/09/amazon_ups_worker_benefit_ante/
[17] https://www.theregister.com/2021/08/06/amazon_covid_office/
[18] https://whitepapers.theregister.com/
Conflict of interest
Our Chancellor's father in law is quite involved with Jeff Bezos, you can read for yourself:
[1]The Mystery of Narayana Murthy's Retail Biz
This means, in my opinion, we are unlikely going to see any action towards Amazon.
[1] https://www.rediff.com/business/special/the-mystery-of-narayana-murthys-retail-biz-amazon-cloudtail-jeff-bezos/20210902.htm
Re: Conflict of interest
Tax is payable on profit not revenue, so the £4.847bn revenue number is just an irrelevant number as far as direct taxation is concerned. Amazon UK's interestingly low tax rate is mainly down to it reinvesting most of its income to grow the business. In this case it ploughed £1.6bn into its operations network and infrastructure. That left them with a profit of £127.8 on which corporation tax at 19% would be a maximum tax bill of £24.3 million. Getting that down to £9.2 was certainly creative and worth a look too see how they did it, but at the end of the day its only that £15 million difference under discussion.
Re: Conflict of interest
Amazon UK's interestingly low tax rate is mainly down to it reinvesting most of its income to grow the business.
Encouraging a business to grow is normally a good thing and to be encouraged. When something grows to the size of Amazon and behaves in predatory ways: it is not a good thing. Amazon needs to be curtailed before it kills more other businesses - that cannot compete because of how Amazon behaves.
Governments need to act to clip the wings of behemoths to preserve healthy competition.
Re: clip their wings
But, as we know, this won't happen . Big Corp has Big Lobbyists to help Big Government leave them plenty of Big Tax loopholes.
This is actually what the government wants , because most corportist capitalist societies have spent many, many decades forwarding pro-business agendas - they have (almost) never met a incredibly profitable business that they didn't like.
As long as it creates jobs, no matter how menial (a la Wal-Mart), and large profits that drive large Wall Street dividends, your / my / their governments are ecstatically happy, because the supply chain, Wall Street, the banks, the investors and the suckers "customers" are "happy".
Re: clip their wings
There are very little loopholes nowadays. Problem is that we don't have any effective institutions fighting corruption and there is no will at HMRC to look at these things.
Re: Conflict of interest
Corporation Tax for big corporations is largely voluntary, because they can shift profits around and declare only as much as they think they can get away with.
That's why we have something called Diverted Profit Tax, that is set higher than Corporation Tax to tackle such issue. Unfortunately, this is rather a discretionary instrument for HMRC and they seem to more preoccupied by chasing pennies.
Re: Conflict of interest
The problem is the creative corporate structures designed to book revenue and expenses in high tax regimes so there are token profits (to limit outrage and allow then to say they pay some tax).
Then the low tax areas book particularly high profits.
Amazon pay exactly as much tax in Britain as they want to be seen to.
It almost seems to me that this is an almost annual affair ... :-(
Next it'll be Dame M-H complaining Amazon don't pay enough.
Then Amazon saying "yes we do because we're lovely"
Then HMRC saying "give us some money (if that's ok with you Mr Bezos)"
The Government will explain how they're actively looking into appointing a top Civil Servant (only named as Sir H.) to form a committee with the remit of looking into the feasability of setting up an investigative committee into looking at corporate tax avoidance ...
And Bezos will continue to line his pockets.
I have no objection to companies only paying tax on the basis of a level playing field. But the mine field of the tax system has mud, hills, holes, tenches, bunkers, vaults and complete subterranean tunnel networks which can be used by the super-wealthy in ways not available to smaller companies.
If the system continues to be deliberately skewed in favour of the super-wealthy, that is a system sailing dangerously close to state sponsored corruption.
This should be repeated
Again, Amazon has done no more than use the instruments legally available to keep its tax bill down.
If you don't like what Amazon does, change the [expletive deleted] law rather than whinging that companies should do something the law doesn't require them to do.
OK, let the down votes commence.
Re: This should be repeated
The problem is part of the money not spent in taxes are used to lobby against changing those laws... although probably the clock is ticking - the pandemic means States need to spend money and those money can no longer come from SMBs and and the middle class only.
Re: This should be repeated
It's not so much about the law, but the lack of enforcement. Our institutions like SFO that are supposed to fight corruption are essentially a laughing stock.
You can have any political option you want, but if corruption goes unchallenged, then there is no point to vote.
The real loser here is ...
... Jeff Bezos! With those pathetic profits, he definitely won't be able to afford another trip to space. We should start a GoFundMe page for his next journey.
Just stop buying all that Chinese made tat
from Amazon.
Spend your money elsewhere.
You know it makes sense.
Re: Just stop buying all that Chinese made tat
Have you tried? It's very difficult to find a product that is not made in China. Then chances are that you find one, when you open it up, all signs will suggest it was actually made in China, but at best boxed in a different country.
I couldn't find an online store that would let you filter by country of origin - perhaps that is something we should start writing to MPs about.
Amazon Web Services UK Ltd, for example, used the "small companies exemption"
Ridiculous. Why not allow them to use the "purple spotted unicorn exemption" or the "magic fairy wishing well exemption|" too - it would actually be taking the piss a little less than they currently are.