By Lucy Caulkett-
Amazon is celebrating its increased contribution to the Uk economy, after its overall surged to £20.6bn to the delight of the giant company which said it is “proud” of its contribution to the UK economy, following a surge in its overall retail sales.
The firm paid £492m in direct taxation as its sales rose 50% to £20.63bn, amid a Covid-driven surge in demand.
The company’s indirect tax bill came to £1.06bn, up from £854m, driven by VAT on increased sales and employee taxes, as it took on more people and increased wages.
Amazon said it had invested £32bn in UK infrastructure since 2010. The company under the leadership of founder Jeff Bezos has been instrumental to the development of numerous courses over the decades.
In 2018, channel 4 signed up Amazon to sponsor the ninth series of The Great British Bake Off, as well as its spin-off shows, for an estimated £5m. The sponsorship will focus on Amazon’s Echo speakers and the capabilities of its Alexa voice service.
After flying to the edge of space in June, Jeff Bezoas announced plans to award $100 million each to CNN contributor Van Jones and chef José Andrés.
He said the gift was in relation to a “surprise” philanthropic initiative he wanted to announce called the Courage and Civility Award- an award that aims to honor those who have “demonstrated courage” and tried to be a unifier in a divisive world, Bezos added.
“We need unifiers and not vilifiers,” Bezos said at the time. “We need people who argue hard and act hard for what they believe. But they do that always with civility and never ad hominem attacks. Unfortunately, we live in a world where this is too often not the case. But we do have role models.”
Speaking about the continuous strides the company is making, Amazon said in a statement:
“We are proud of the significant economic contribution we are making to the UK economy,” Amazon said in a statement.
“Looking ahead, we know that the UK remains full of opportunity and we continue to be excited by the potential to continue to invest, create jobs, develop talent and have a positive impact in communities across the country,” the statement added.
Amazon’s total sales in the UK, rose to £20.63bn during 2020 – up by more than 50% from £13.73bn in 2019.
The direct tax bill was up by more than two-thirds compared with the £293m it paid in the previous year.
The firm, which employs 55,000 people in the UK, said the taxes included business rates, stamp duty, corporation tax and other contributions.
Profits at the division rose by a quarter over the same period to £128m, while sales soared by 64% to £4.85bn.
That performance helped boost Amazon’s total revenues in the UK, from retail, logistics and IT services, to £20.63bn during 2020, approximately double the takings of Marks & Spencer and up slightly more than 50% from £13.73bn a year before.
The company, which has made its founder and outgoing chief executive, Jeff Bezos, a fortune of more than $200bn, tried to fend off accusations of tax underpayment by issuing a statement that said its UK business as a whole paid out £492m in “direct taxes” last year, up from £293m a year before.
That figure includes employer’s national insurance, business rates, stamp duty and corporation tax. The company did not break out its total corporation tax bill, but at least half of the “direct taxes” figure is thought to be accounted for by national insurance and business rates.
The group also said it invested £1.6bn in the UK, more than double the £690m a year spent before, as the group extended its operations to meet high demand during the pandemic. Investments include 11 on-site solar power schemes to help run its facilities, and a 350MW windfarm project off the coast of Scotland.
Growing Employment
Amazon now employs more than 55,000 people in the UK, including 10,000 jobs created this year, with more staff being recruited to meet soaring demand. Amid a recruitment crisis across the UK, Amazon has resorted to offering new warehouse recruits a £1,000 joining bonus in an attempt to attract staff.
The company said in a statement: “We are proud of the significant economic contribution we are making to the UK economy. Looking ahead, we know that the UK remains full of opportunity and we continue to be excited by the potential to continue to invest, create jobs, develop talent and have a positive impact in communities across the country.”
Paul Monaghan, head of the Fair Tax Foundation campaign group, described the company’s figures as “more smoke and mirrors from Amazon, who are still refusing to disclose exactly how much total profit they make in the UK, and how much tax they pay on this”.
He continued: “Much of their UK income continues to be shunted to Luxembourg, where there is a ‘loss-making’ subsidiary that is not only not paying tax, but is generating enormous tax reliefs that can be used in the future to ensure that little or no tax continues to be paid. Amazon is growing its market domination across the globe on the back of income that is largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach.”
GMB, the union for Amazon workers, said the company’s tax bill was “frankly insulting” and said firms that had profited from the pandemic should pay more.
Mick Rix, GMB National Officer, said:”Amazon workers suffer unsafe, dehumanising work practices; breaking bones, falling unconscious and being taken away in ambulances.
“Ministers must get a grip of this runaway company and make sure pandemic profiteers pay more.
“Amazon’s key UK business paid just £3.8m more corporation tax last year than in 2019, even as sales increased by £1.89bn.”
In April last year, the UK government launched a 2% tax on digital sales amid concerns that big tech firms were re-routing their profits through low tax jurisdictions. The Digital Services Tax is also included in the £492m figure.
Chancellor Rishi Sunak said in June last year that the coronavirus crisis had made tech giants even “more powerful and more profitable”.
“As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there,” said labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.
“Therefore it’s impossible to know what their true economic profit is,” Prof Sikka said.
Given the profits declared by competitors, Prof Sikka said Amazon’s tax bill “seems very low”, whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.
“We need a complete change in accounting regulations which currently increase opacity rather than transparency,” Prof Sikka added.
Professor of taxation law at King’s College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.
“It seems that Amazon realised that they would need to pay a respectable amount – and, are hoping that an increase of £3.8 million sounds like a lot of money,” Prof Mumford added.