Amazon claimed sales in the UK of £207m last year. How much did amazon.co.uk actually take? £2.9bn

Online retailer forced to reveal full extent of its tax avoidance policies by Public Accounts Committee

Martin Hickman
Tuesday 27 November 2012 17:27 EST
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Amazon UK's total sales topped £2.9bn last year, according to previously secret figures that expose the extent to which the online giant has been minimising its tax liability in Britain.

The revelation that the retailer generated vast sales while declaring Amazon.co.uk revenues of only £207m sparked fresh calls last night for a crackdown on tax avoidance by multinational companies.

Figures supplied by Amazon to the Commons Public Accounts Committee (PAC) show that for the past three calendar years its UK sales were £7.1bn. For the same period, 2009-2011, the online retailer's UK company, Amazon.co.uk Ltd, paid £2.3m in corporation tax.

The secret of Amazon's low tax bill is that it books most of the sales from UK customers at its European subsidiary, Amazon Eu Sarl, in low-tax Luxembourg – which pays its UK firm for warehousing services.

When he appeared before the PAC's tax inquiry on 12 November, the company's director of public policy, Andrew Cecil, angered MPs by telling them he did not know the company's revenue in the UK. He then agreed to supply the figures "in confidence" at a later date.

Those figures, published by the PAC yesterday, show that in 2009 £1.86bn of sales flowed through the website Amazon.co.uk. In 2010 sales were £2.36bn and in 2011 – the last full year available – £2.9bn.

At the same time Amazon's accounts for 2011 with Companies House show Amazon.co.uk Ltd had revenues of £207m. Despite the large amounts of business, in 2009 Amazon.co.uk paid no UK corporation tax. In 2010 it paid £517,000 and in 2011, £1.8m.

Amazon has not released its profit figures on its UK sales, which are bundled into its European figures, so the corporation tax that would have been payable in the UK – had all the sales been registered here – is unknown.

However, in the US, where its operation is much larger, its profit margin is 3.5 per cent. Assuming a UK profit margin of 5 per cent, Amazon could have paid UK corporation tax of £96m between 2009 and 2011. In reality, because it routes its sales through Amazon EU Sarl, amazon.co.uk, the UK "warehousing" subsidiary, paid £2.3m for the three years.

The disclosure of the full scale of Amazon's UK sales, after criticism of the tax affairs of fellow American companies Starbucks and Google, prompted calls for a crackdown by HMRC.

Richard Murphy, director of the Tax Research campaign, said: It's very hard to believe that a company making sales of £2.9bn in the UK and employing 15,000 staff in this country has almost no tax liability when its underlying business shows signs of growth.

"I think the PAC needs to ask how it can so easily expose what looks like an accountancy charade when the HMRC is apparently so willing to accept it.

"It should also look at the rules on company residence so we can say that this company is trading in the UK, even if it wants to claim it is in Luxembourg." He added: "I hope the PAC, frankly, calls evidence on how the rules can be changed."

Amazon defended its record. In a statement to The Independent, it said: "Amazon pays all applicable taxes in every jurisdiction it operates within.

"Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites in a number of languages dispatching products to all 27 countries in the EU. We have a single European Headquarters in Luxembourg with hundreds of employees to manage this complex operation."

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