Amazon’s tax avoidance could have cost the UK economy around half a billion pounds in 2021

Is Amazon obscuring its tax practices?

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.

However our figures reveal an expected range of between £228m and £634m due in 2021. According to the most recent figures, because of its aggressive tax avoidance strategies, Amazon is likely to pay around £22m - just 4.2% of the £500m that might be expected.

Amazon has recently been making a lot of noise about how much it raises in other taxes like VAT and National Insurance for the UK economy. This is misleading because what is really happening is that it is replacing other shops (remember the high street?) which not only would be paying these taxes, but some corporation tax on their profits as well.

Because of this, Amazon is helping to build an economy where not everyone contributes to vital public services, instead creating excess profits for the laughable vanity projects of its billionaire owner in a time of crisis (such as space rocket rides for celebrities).

We conclude that the range is large (between £228m and £634m), because of the lack of publicly available data. It is, however, many orders of magnitude larger than estimates of actual corporation tax paid by the company which range from £15.4m to £22m.

In Amazon's communications, it makes much of how its losses are partly attributable to its huge capital investments in technology and infrastructure such as warehouses. Three questions however remain unanswered:

1. Although this may be true, whilst the bulk of its UK sales continue to be routed through its Luxembourg subsidiaries, it does seem like something fishy is up. Why not just declare all UK sales in the UK and make these same investments?
2. If its UK (and other international) businesses are so unprofitable, leading to minimal corporation tax being paid everywhere, why would any company want to invest so much capital in such an unprofitable business?
3. If its claims are all true, why not publish full country-by-country reporting of its sales, capital investments and tax paid? There are now some excellent organisations to help with this including the GRI and a new international gold standard at the Fair Tax Foundation.

It is pleasing to see that a group of ethical investors have tabled a motion at Amazon's 2022 AGM on May 25th to make much better tax disclosures using such frameworks.