Amazon UK’s substantial tax avoidance

Ethical Consumer has been following Amazon's tax approach for years. 

Estimating the total amount of tax that Amazon should have paid is difficult because it is not very transparent about its finances – only disclosing the minimum required by law in each country it trades in.

According to our latest estimates, Amazon's corporation tax avoidance could have cost UK citizens around £433 million in lost taxes in 2023 alone. 

Unfortunately this situation hasn't changed much in the last few years.

Why Amazon's tax avoidance matters

We think there are two reasons why Amazon's tax avoidance is important. 

1. The UK government needs revenue to rebuild public services

In 2024 UK voters dramatically rejected any further hollowing out of public services. The new government needs new sources of revenue to help rebuild the NHS, schools and other public services. (Remember the £22bn black hole?)

Tax from corporations like Amazon is one form of income for the government to use for public services. 

2. Amazon is increasingly replacing existing retailers who were paying tax

Amazon has been talking publicly about how much it invests in the UK and is 'contributing to the UK economy'. 

And you can't drive down a motorway these days without seeing another giant Amazon fulfilment centre popping up somewhere.

The trouble with Amazon's argument is that, for each of these new Amazon warehouses, 100 shops will have closed down somewhere else – likely on a high street near you. 

It’s not that people are buying more TVs, shirts or hand blenders – it's just that they are buying them from Amazon instead of the retailers on the high street. 

Amazon's 'tax efficient' business model is able to undercut the shops we used to use and which didn't 'offshore' their payments to Luxembourg.

The net effect of this is to reduce corporation tax, not only because of Amazon's tax approach but also because of the loss of smaller retailers which were paying tax.

Amazon's retail and tax methods therefore hollow out the tax base that used to support the public services we all need. Indeed, it seems puzzling to us that Amazon can claim to be growing the economy this way when it looks to us that it might be contracting it instead.

What can £433 million be used for?

Based on our calculations, we estimate Amazon will avoid paying around £433 million in corporate tax for 2023.

This money could be used for vital public services in the UK. This includes recruiting staff or funding vital schemes for the public good.

As the infographic shows, £433 million is a lot of money which could be used for social good in the UK. For example:

£433 million could be used to recruit:

• 12,735 additional nurses, or
• 5,932 additional doctors, or
• 12,735 new teachers.

Or £433 million could pay for:

• 1,443,333 additional winter fuel payments of £300 this year, or
• 61,857 home insulation installations at £7,000 each, or
• 3,256 new social homes 

How much corporate tax does Amazon pay?

Our latest research estimates that Amazon will pay around £18.7m in corporation tax for 2023. 

This leaves a missing £433 million of tax which won't go into the UK public purse. 

We have estimated how much Amazon should probably have paid, since 2019. The sums involved are staggering.

(Sources for the figures are at the end of the article.)

How much tax do other companies pay?

Other UK wholesale and retail businesses paid £8.7bn in corporation tax between them in 2022/23. 

It is shameful that Amazon, the 3rd biggest UK retailer by sales, likely contributed just 0.2% of this total (£18.7m).

What can we do about Amazon's tax avoidance?

It doesn't have to be this way. Ethical Consumer has been campaigning against Amazon's tax avoidance since 2009.

We call on:

• Consumers to boycott Amazon until it pays its fair share of corporation tax, and to tell the company why they are doing this.  

• The government to require Amazon to publish the sales, profits and taxes it has paid in each country that it operates in, and to close loopholes which allow it to avoid such enormous amounts of tax in this way.

• Amazon to pay taxes on its UK profits in the same way as other businesses do here so as not to distort our economy. It should publish profits and taxes paid on a country by country basis too, so that citizens can see that it is doing the right thing (or not). Until it does this, it has no right to criticise our estimates – which it commonly does – because its accounts globally are so opaque that it is not possible to come to any other conclusion. 

Sources and calculations for our Amazon tax estimates

Columns 1 & 2: Amazon's global sales and UK sales: AMAZON COM INC, 10-K Annual Report for each of the financial years shown, ending December 31.

Column 3: "Estimated net UK profit if average margin globally is 7.35%" 

Column 4: Total estimated Corporation tax due $m. UK Corporation tax was 19% throughout this period until April 2023 when it rose to 25%. The 2023 calculations combine three months at 19% with 9 months at 25%.

Column 5: Converted to sterling; Average USD to Sterling rate over the last five years was 1.283492. 

Column 6: Estimated corporation tax paid:

• 2021 to 2023

• 2020

• 2019