Amazon’s main UK arm received a tax credit of just over £1m last year from HM Revenue and Customs, despite the online retailer’s profits jumping almost 60% to £204m.
The tax benefit is part of 1 billion euros (850 million pounds) in tax credits given to Amazon by governments across Europe, up from 56 million euros a year earlier, according to accounts filed for the Luxembourg-based arm of the US company.
Amazon’s losses in Europe jumped 90% to 2.1 billion euros before the tax cut, despite a nearly 16% rise in sales to 51 billion euros.
At its annual shareholder meeting in May, Amazon failed efforts to force the company to be more transparent about its financial affairs.
Amazon UK Services, the group’s warehousing and logistics business, which is believed to employ more than half of its UK workforce of nearly 75,000 people, increased revenue by just over a quarter to £6.09bn, according to the returns to be filed at Companies House.
However, he reserved a discount on “current tax” – or corporation tax – which is normally paid on profits and after taking advantage of the government’s “super deduction” scheme for businesses investing in infrastructure, which was introduced by the then chancellor Rishi Sunak, last year.
The relief, which allows companies to offset 130% of investment costs on plant and machinery against profits in the two years from April 2021, resulted in Amazon receiving a discount on the previous year’s tax payment of £18.3m in 2020 , with nothing to pay 2021.
Amazon said total UK revenue, including all activities from retail to cloud computing services, rose 12.6% to £23.2bn last year, putting the business just ahead of Asda, the country’s third-biggest supermarket UK, in scale and more than twice the size of Marks & Spencer.
Paul Monaghan, chief executive of the Fair Tax Foundation, said: “The number that Amazon still refuses to reveal is exactly how much profit it makes in the UK in total and what tax it pays on it. This is despite many demands not only from civil society activists, but now also from a significant number of their institutional investors.
“Amazon appears to be increasing its market dominance around the world on the basis of largely untaxed income – allowing it to unfairly undercut local businesses that take a more responsible approach.”
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Amazon said in a statement: “The government uses the tax system to actively encourage companies to invest in infrastructure and create jobs. Last year we invested more than £11.4 billion in the UK, building four new fulfillment centers and creating more than 25,000 jobs.
“We are investing heavily in job creation and infrastructure across Europe – more than €100 billion since 2010. Corporation tax is based on profits, not revenue, and last year Amazon EU Sarl made a loss as we opened more than 50 new sites across Europe and created over 65,000 well-paid jobs, our total permanent workforce in Europe exceeded 200,000.
“Across Europe we pay corporate tax in the amount of hundreds of millions of euros. We run this pan-European business from our headquarters in Luxembourg, where we have over 3,600 employees and growing, including our senior management team.”
Amazon said it paid 648 million pounds of “direct taxes” in the UK in 2021 – up from 492 million pounds a year earlier – but these included employer national insurance contributions, business rates, corporation tax, import duties, stamp duty on land and digital services tax.
Amazon does not break down how much it pays in corporation tax for UK businesses as a whole – leaving the UK services division as the best indicator of the bill.
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