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Accounts show that Amazon paid less tax in the UK in 2015 than a year earlier despite rising UK sales and a change to its accounting methods following the introduction of the so-called Google Tax, The Bookseller can reveal.
Sales via Amazon.co.uk grew by 8.3% last year to £6.8bn ($9bn) according to the accounts of its US parent. But accounts filed at Companies House for its UK Amazon Services arm, which relates to the company’s fulfilment operation and distribution centres in Britain, show that the company paid just £9.8m in tax to the UK authorities, down from £11.9m a year earlier. The accounts show Amazon Services in the UK recorded £946.5m in sales through the UK for the year to 31st December 2015 (up 39% from a year earlier), and made a profit of £38.7m, up 72% from £22.5m a year earlier.
It remains unclear why there is such a huge discrepancy between the sales recorded in the UK by its American parent, and those reported on its UK accounts.
Concerns have been raised over a number of years by politicians and booksellers about the low levels of tax Amazon pays in the UK despite its size.
Amazon changed its financial reporting practices to avoid the diverted profits tax, known commonly as the Google Tax, which came into force on 1st April 2015, which imposes a 25% tax on the profits of companies which artificially move earnings outside of the UK. As a result, Amazon began booking sales through the UK in May 2015. However, a HMRC official told The Bookseller that UK law meant it could not confirm this or reveal the level of tax paid by Amazon in the UK.
The Companies House accounts for Amazon Services also revealed the company received more money in government grants in 2015 then a year earlier, receiving nearly £2m in Westminster hand outs in 2015, up from £1.8m a year in 2014.
An Amazon spokesperson said: “Amazon pays all the taxes we are required to pay in every country where we operate. Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly-competitive, low margin business.”
The spokesperson added the company had invested over £4.6bn in the UK since 2010 and was in the process of creating 3,500 permanent jobs in research and development, our head office, customer service and fulfilment centres across the UK this year to bring our total workforce to 15,500.
The UK is still Amazon’s third largest country for sales, after the US, which is top with $70.5bn sales in 2015, and Germany, which took $11.8bn. Japan is Amazon’s fourth largest country for sales, taking $8.3bn in 2015. Despite UK sales rising by 8.3% to $9bn, year-on-year growth in Amazon sales have slowed. In 2014, sales grew 14% and in 2013, sales grew by 12.6%. Meanwhile, sales in Germany fell marginally, down just under 1% to $11.8bn.