Amazon forced to disclose UK sales

Amazon forced to disclose UK sales

Amazon's UK net sales were £2.91bn in 2011, according to information the retailer has been required to file with the House of Commons Public Accounts Committee (PAC).

The company's director of EU Public Policy, Andrew Cecil, was asked to turn in extra information to the PAC after failing to provide answers to MPs' queries about the structure of the company and its UK sales and profit at an inquiry earlier in the month.

The PAC has released a document on its website of extra written evidence given by Cecil, in which he states: "Although we have not publicly disclosed net sales generated from specific websites targeting EU countries or elsewhere, in response to the committee request, we would like to share with you on a confidential basis net sales generated
from the website over the past three years."

The table shows that in 2011, Amazon¹s UK website generated £2.91bn in sales, paying £416m in UK VAT. Those sales were an increase of 23.3% from 2010, where it made £2.36bn in revenue, paying £262m in VAT. In 2009, Amazon made £1.87bn in sales and paid £172m in VAT.

This contrasts with the published accounts for the UK-established which in 2011 had revenues of £207m, which it derived from providing services in the UK for Amazon Europe companies, with an after tax profit of £1.2m and a tax expense of £1.8m.

Along with details on Amazon UK sales, Cecil also provided the committee with information about the company's European corporate structure, which he could not answer in the committee hearing. His written evidence said that right to intellectual property, EU e-commerce retail business on all EU websites and its marketplace business is owned by Amazon Europe Holding Technologies SCS.

Amazon's EU digital business, comprising of e-books and MP3 sales, is operated by Amazon Media EU Sarl, which is owned by Amazon EU Sarl. Luxembourg attracts a 3% VAT tax on e-books, whereas the UK attracts a 20% VAT charge on digital books.

Cecil said: "The services provided include fulfilment and logistic service, customers support services, accountancy, tax, legal, human resources, localisation and similar back office services, merchandising and marketing support services and purchasing assistance." The PAC committee hearing had previously established that Amazon employs 500 people in Luxembourg, in comparison to 15,000 in the UK.

Cecil added: "Fulfillment and customers service centres located in the UK are operated by Ltd, a UK company. Ltd earns a margin on its operating costs for providing services performed in the UK to group companies, primarily to Amazon Eu Sarl."

In a separate document, entitled Supplementary Written Evidence from Amazon EU Sarl, the company said its UK sales in 2011, including subsidiaries such as LOVEfilm, were £3.35bn and the profit it made on those sales was £74m (before tax). The document went on to reveal: “Costs associated with these sales include cost of sales of £2,690m; operating expenses of £417m; intercompany charges of £151m primarily for the use of intellectual property licensed from Amazon Europe Holding Technologies S.C.S; £12m of stock based compensation for the UK group of companies; and £7m of other expenses.”

It added: “Given the non-public nature of this information, we respectfully request confidential treatment.”  

It is expected that the PAC will publish a comment on the additional information provided by Amazon.