Amazon paying a fraction of its tax on European revenue

- Leadership - Aug 11, 2017

Debates over the amount of tax paid by US businesses in Europe are likely to return to the fore, as it has been announced that Amazon paid only 16.5mn euros on European revenue of 21.6bn last year.

American tech companies have been accused in the past of taking advantage of complicated cross-border regulations in order to minimise tax; Amazon itself halved its UK corporation tax bill in 2016.

According to The Guardian, Ana Arendar, Head of Inequality for Oxfam, said: “Despite some action by ministers and companies, widespread corporate tax avoidance continues to cost both rich and poor countries billions every year that could pay for schools and lifesaving healthcare.

“We urgently need comprehensive public country-by-country reporting for multinationals to ensure they pay their fair share of tax – the UK government should implement this by the end of 2019 – unilaterally if necessary.” 

 

While Amazon is a huge global business, the margins it makes are minimised due to the innumerable third party partners it works with. It even stated that a loss may occur during the third quarter of this year.

As such, it may appear understandable that the business wishes to minimise tax, but the issue of creative accounting is one that haunts companies like Amazon.

A spokesperson for the business said: “Amazon pays all the taxes that are required in every country where we operate. We operate a pan-European business from our headquarters in Luxembourg where we have over 1,500 employees and growing, including our senior leadership team. We’ve invested over €20bn 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.”

Two years ago, Amazon did say that it would cease the use of controversial corporate structures which diverted profits from the UK, and is expanding its workforce this year as well as opening new warehouses.

Is its contribution to the UK a fair trade for tax cuts?

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