Online retailing giant Amazon is facing fresh criticism after its annual accounts show the online retailing giant paid £2.4m in corporation tax last year on UK sales of £4.3bn.
Amazon's corporate tax bill is just below the £2.5m in aid the company received from the Scottish government last year to expand its warehouse operations in Dunfermline and Gourock, according to its filing at Companies House.
In its accounts, the UK company declared a turnover of £320m for 2012, up 50% on 2011, and recorded a profit before taxation of £10.8m and said it 'is expected to remain profitable for the foreseeable future'. Amazon's regulatory filings to US investors showed a growth in UK turnover of 20% during 2012, to $6.5bn (£4.3bn).
Amazon employs over 4,000 staff in the UK, plus thousands more via contracting agencies, but is classed as a service provider to the Amazon EU Sarl business in Luxembourg, which allows it to reduce its corporate tax bill.
The UK business is funded by fees from Amazon EU Sarl, in return for services such as warehousing and distribution and negotiating purchasing deals with book publishers, but these are only just enough to cover its operating costs, leaving little in the way of profits to be taxed. All sales, marketing and finance activity is routed via the Luxembourg company.
Margaret Hodge, chairman of the Public Accounts Committee (PAC), described Amazon's tax contribution in the UK as 'just a joke'.
'What people will find particularly galling is that the amount Amazon is paying in tax is actually less than they are taking from UK taxpayers in the form of government grants. Companies like Amazon should pay their fair share of tax based on their economic activity in this country and the profits they make here,' Hodge said.
An Amazon spokesman said: 'Amazon pays all applicable taxes in every jurisdiction that it operates within. Like many companies, Amazon has received assistance in relation to major investments in the UK.'
An investigation by the Guardian suggests that UK-based staff at Amazon may be engaged in sales and marketing activity, which would contract evidence the company gave to a PAC hearing on tax avoidance by multinationals in November last year, when it said it did not have 'permanent residency' in the UK.
The paper cites a job advert for a senior financial analyst at Amazon's Slough office who 'will help establish revenue targets, lead pricing analysis and recommendations, generate competitive analysis and support key operations metrics and goals.'
A PAC hearing scheduled for later today (16 May) will see senior executives from Google and their auditors, Ernst & Young, recalled to explain similar discrepancies between their earlier evidence and revelations made in a Reuters investigation which suggested Google undertakes more substantial business activities in the UK than it originally disclosed.
