Booksellers have welcomed the news that Amazon is to start booking sales made to customers in the UK through its UK branch instead of through Luxembourg, though some say they remain "cautious" about the development.
The online retailer brought its new arrangements, which means it will be taxed by HMRC, into force on 1st May.
The move means it will not have to pay the diverted profits tax, known commonly as the Google Tax, which came into force on 1st April and sees companies having to pay a 25% tax on profits which are artificially moved outside of the UK.
Tim Godfray, chief executive of The Booksellers Association, said that “being able to move costs and sales from country to country has given Amazon a considerable competitive advantage over UK businesses that don’t have an international dimension”.
“The decision by Amazon to end their practice of maintaining that sales to UK consumers were coming from Luxembourg when they have these absolutely massive warehouses and offices in the UK can only be welcomed, as the internet giant will now be assessed for UK Corporation Tax on the same basis as that applying to our members,” he said. “We will wait to see exactly how much Corporation Tax Amazon will pay on their UK sales in the future.
“In January, the VAT Rules were changed, so that the VAT charged on e-books now relates to the consumer’s country of residence and not the country of origin. Amazon are now having to adopt the same VAT rate for e-books as our members, so that loophole is now closed. We will continue to maintain pressure on UK and European legislators to help increase e-book interoperability. Not only should consumers be able to read any e-book on any device, but they should also be able to obtain e-book content from any supplier.”
The Booksellers Association has made representations to the Treasury, the Department of Business, Industry and Skills, the European Commission and to MEPs “to produce a more level competitive playing field in our book market”, said Godfray, and “the legislators have listened to us and because of this pressure Amazon are starting to change tack”.
James Daunt, m.d. of Waterstones, said: "The change is a welcome one for the UK taxpayer. It is also a small move to make the playing field for high street retailers more level. The remaining major distortion is the burden of rates which fall quite disproportionately upon shops. This is a particularly acute problem in those parts of the country where economic conditions are most difficult.
"Rates can only be made more equitable by an act of political will. This caused Amazon’s recent move: they would have been caught by the “diverted profits tax” introduced by George Osborne last month and act in advance of anticipated changes to EU tax legislation. It is long overdue that rates are addressed by the government."
Paul Currie, c.e.o. of Foyles, said: "Any move that creates a more equal business environment for all retailers of books, be it bricks and mortar or digital, is very welcome."
Sheila O’Reilly, owner of Dulwich Books, said the move helped “level the playing field slightly” between Amazon and other book retailers.
“The decision regarding Amazon is a small victory for UK retailers, and it is in part thanks to the pressure of the BA and others that they have decided to make the change,” she said. “However since the tax is based on profits and they are unlikely to make any I don't expect the HMRC to be receiving much in the way of payment of taxes. It is a real shame and scandal that it has taken them so long to make this change and also that the taxes will not be back dated to compensate for the years and years of non-payment.
“What we will see is the level of UK sales, which could be surprising to all retailers. It does help level the playing field slightly but they, like many major corporations, have departments to make sure they reduce the level of taxation paid which is not a luxury small independent bookshops can afford.”
Marie Moser, owner of Edinburgh Bookshop, said she gave Amazon’s move “cautious approval”. She said: "I am cautiously optimistic. It is a good gesture. The proof of the pudding is in the detail.”
Moser said she was still concerned about Amazon’s use of zero hours contracts, something the company was not alone in doing. “I take massive pride that I pay the living wage here,” she said. “My employees get sick pay and flexible hours. These are all things that contribute to overheads, and they should contribute.”
However, an Amazon spokesperson took issue with Moser's zero contracts claims, saying: "Amazon employees do not have zero hour contracts. Currently over 95% of temporary associates in our fulfilment centres work a 40 hour week. In addition, we have agreements with our employment agencies that all temporary associates will be paid for no less than 20 hours of work per week, even when 20 hours of work is not available."
Tim Morris, who owns Booka Bookshop in Oswestry with his wife Carrie, said: "Through their complex corporate structures Amazon have deliberately avoided paying their fair share of tax in the UK for a number of years. The fact that they appear to have rethought their approach to recording sales in the UK only serves to put right something they should have been doing already. This is a step in the right direction, but whether this actually results in them paying more tax remains to be seen."