Amazon pays £15m tax on £19.5bn in European revenues

Figures reignite criticism over alleged tax avoidance

Amazon logo
(Image credit: Leon Neal/AFP/Getty)

Amazon has reported that it paid taxes of €16.5m (£15m) in Europe last year on revenues of €21.6bn (£19.5bn), rekindling the debate about tax avoidance by multinational companies, says The Guardian.

In the UK the online giant reported taxes through its warehouse and logistics operation of £24m, less than half what it paid in 2015 despite total revenue from the country "rising from £946m to £1.46bn".

Amazon books most of its income through its Amazon Europe arm in Luxembourg. Revenues made in individual countries are paid back to the parent business as a charge for delivery and brand licensing.

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Amazon's Luxembourg arm booked the bumper £19.5bn revenues, but paid just £15m in tax because it generated modest profits of €59.6m (£54m).

A spokesperson for the company said: "Amazon pays all the taxes that are required in every country where we operate."

Writing on Forbes, Tim Worstall says the opprobrium shows people "just don't understand" the Amazon model, which involves selling products cheaply at low margins and reinvesting much of any profit that is made.

This means Amazon's earnings are low, a fact that has long been a source of debate among investors in the firm. Worstall says: "We don't tax corporations on business, we tax them upon the profits made from business".

A spokesperson for the company said: "We've invested over €20bn (£18bn) in Europe since 2010 and expect to hire 15,000 new employees this year, bringing our total permanent European workforce to over 65,000 people.”

The online retailer has been increasing its presence in the UK. It added 50 per cent to its headcount last year, bringing the total up to 15,500.

As was noted during a previous controversy over Facebook's tax bill in the UK, increased headcount and a bumper round of bonus awards reduce profits and therefore decrease corporate taxes.

But they also increase personal taxes in the form of income tax and national insurance. This could result in higher overall revenues for the exchequer.

Critics, however, point to the opacity of these arrangements, which prevent proper analysis of the levies that are actually paid.

Ana Arendar, Oxfam's head of inequality, says the figures show "we urgently need comprehensive public country-by-country reporting for multinationals to ensure they pay their fair share of tax".

She adds that the UK government "should implement this by the end of 2019 – unilaterally if necessary".

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