Amazon is set to receive a multi-million pound tax rebate following a legal row over business rates at its Rugeley warehouse in Staffordshire.
The online retailer will receive a refund of around £3.2m as a result of changes to the rateable value of the warehouse and premises owned by Amazon at Gazeley Park, according to Cannock Chase Council.
The warehouse was built in 2009 with a rateable value of £3.18 million and subsequent revaluations in 2010 and 2017 have maintained the Valuation Agency Office assessment at this figure. But appeals made by Amazon, arguing the mezzanine floors do not count as floor areas, have succeeded in reducing the valuation to £2.5m, with the refund backdated to the site opening in August 2011.
Exact details of the refund are still awaited but Cannock Chase Council says it is set to lose £1.2 million as a result of the changes to the largest rateable value site in the district, "severely depleting" its resources for its 2020/2021 budget.
The council plans to write to the government to address the issue, saying the business rates system is "clearly flawed".
Deputy leader of the council and portfolio holder for town centre regeneration Gordon Alcott said the reduction in Amazon's business rates is a "major blow" to the council.
He added: "The financial impact is of great concern to the council, however. I feel particularly sorry for our town centres and retail traders where there doesn’t appear to be a level playing field between the business overheads paid by these so-called bricks and mortar businesses against those paid by online traders. Although the government is offering business rate relief to some retail providers, it is only a sticking plaster and does not solve the fundamental problem.
“Amazon describes itself as providing fulfilment centres supplying goods direct to the customer and clearly the business rates system does not reflect this treating such sites as basic warehouses, which means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops."
A spokesman for Amazon said: "Business rates are part of Amazon’s broader £18 billion investment in the UK since 2010, which includes creating 2,000 jobs last year, taking our total workforce to 29,500. This investment helped contribute to a total tax contribution of £793m during 2018–£220m in direct taxes and £573m in indirect taxes."
The Booksellers Association (BA) has long called for an overhaul of business rates, which has seen growth outgrow inflation and become a huge financial burden for small shops.
BA managing director Meryl Halls said the refund is a "deeply concerning development for the local community, local businesses, and high street retailers, and is yet another example of the many ways in which our current business rates system urgently needs addressing".
She added: "That global conglomerates like Amazon are in a position to be able to hold local councils to ransom over tax is a situation that cannot be allowed to continue."