£ 38bn in sales … how did Amazon not pay corporate tax? LEO McKINSTRY | Leo McKinstry | Columnists | Comment
In an extraordinary report released this week, it was revealed that the European arm of the powerful online retailer paid no corporate taxes last year, despite record sales of £ 38bn fueled by the surge in Internet shopping boom during Covid lockdowns. Indeed, far from using its unprecedented revenue to help battered governments across Europe in crisis, the company tapped into its complex web of accounting procedures to receive payment in the form of a tax credit from ‘worth £ 49million.
Whatever hardships ordinary citizens have endured, the pandemic has been good for Amazon. In Britain alone, its revenues soared 51% during that period to £ 19.4 billion, roughly double that of M&S.
Yet by funneling all of its European income through Luxembourg’s small tax haven and claiming massive losses of over £ 1 billion, Amazon had no corporate tax in Europe.
It can only be described as a bizarre result that reverses common sense and morality. It is absurd that many UK independent traders and small businesses paid more corporate tax than one of the biggest and wealthiest companies in the world.
Admittedly, Amazon is a surprisingly efficient and innovative organization that has revolutionized commerce. There is also no indication that in his tax affairs he did anything illegal from a distance. Yet his ruthless approach could be characterized as unethical. As veteran Labor MP Margaret Hodge, a fierce critic of the digital giants’ manipulative accounting, said of the latest figures, “It looks like Amazon’s relentless campaign of appalling tax evasion continues.
She is right, although Amazon is not unique in its self-interested position. At the end of April, it was revealed that last year, the UK operation of Google had paid just £ 50million in corporate tax on sales totaling £ 1.8bn, up from £ 1. £ 6 billion the year before. “Although the UK offers significant growth for the business, the resulting taxable profits remain pitiful,” argued the Tax Justice Network.
Last December it was reported that Facebook had paid £ 28.5million in UK corporate tax the previous year, despite a record turnover of £ 1 billion, while in July 2020, Apple had reported revenue of £ 1.37 billion in the UK, which produced only a meager corporate tax payment. of £ 6.2 million. Like Amazon, these global companies flourished during the pandemic.
Last week, for example, Microsoft in the United States reported a 50% increase in the company’s revenue in the first quarter of 2021. But that makes it all the more important that they accept their financial obligation. After all, in every country in which they operate, they benefit from state-funded education systems, transportation networks, civic infrastructure and employment supports. They should return the favor by paying their share of taxes.
Injustice is compounded by hypocrisy. While avoiding their financial burden, they gossip about their commitment to social responsibility, reflected in their adherence to the fashionable awakening program and their funding for the projects they have chosen. “We’re looking for ways to amplify under-represented voices and empower diverse communities,” Amazon boasts.
But Amazon’s much-touted “culture of inclusion” doesn’t seem to include paying an appropriate share. Philanthropy or social justice activities cannot offset taxes either. No individual would be allowed to reduce their bills by informing HMRC of their generosity to the RSPCA.
The scale of tax evasion is all the more aggravating, given the enormous, increasingly monopolistic power that the tech giants now wield. Despite the absence of any democratic mandate, they act more and more like our lords as they dictate to us public policy, crush competition, apply progressive orthodoxy and engage in censorship.
They need to be made much more responsible. A key way to achieve this would be to introduce a stricter tax regime whose requirements include a real assessment of their turnover and income. Such a move will require action in Britain and coordination around the world.
But as Amazon’s startling results demonstrate, it is urgent to do so.