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Tax-scrimping exposed: 'Immoral' Amazon paid just 1.8m to Treasury despite making 3.35 BILLION in sales in the UK
Online giant admitted making 3.35bn in sales in Britain last year – much higher than the 207m figure that it previously showed in its UK accountsTrue extent of tax-scrimping exposed after Amazon was grilled by MPsDisproportionate payment, branded 'immoral' comes at time of austerity
07:47 GMT, 28 November 2012
Amazon, the online giant was forced to reveal it paid just 1.8m to HMRC despite making 3.35 billion in sales in Britain
The full extent of Amazon’s tax avoidance was laid bare last night after the online giant was forced to reveal it paid just 1.8m to HMRC despite making 3.35 billion in sales in Britain.
The official figures amounted to a miserly 2.4 per cent tax rate which the company paid on its UK profits – details which it had been pleading to keep secret.
Amazon had for years refused to disclose the closely-guarded numbers claiming they were ‘commercially sensitive’.
But after being grilled by MPs earlier this month, the true extent of its tax-scrimping in Britain has finally been exposed.
The figures, provided by Amazon in a letter to the Public Accounts Committee, show the company’s UK operations recorded a pre-tax profit of 74million last year but Amazon paid only 1.8million to the taxman.
The disproportionate payment, branded ‘immoral’ by MPs, comes at a time of national austerity when ordinary families are suffering the worst squeeze on living standards for generations.
Any shortfall in corporate tax revenues puts a strain on the resources the government needs for schools and hospitals.
Amazon admitted it made 3.35billion in sales in Britain last year – much higher than the 207million figure that it previously showed in its UK accounts.
As a percentage of turnover, the tax rate is a negligible 0.05percent.
The huge importance of Britain to Amazon’s business was shown by the fact that the UK accounts for 45 per cent of the online giant’s European operations.
But despite its over-reliance on UK business Amazon’s headquarters are based in Luxembourg, where it enjoys low tax rates.
The figures – which show the company’s heavy dependence on Britain to buy its books and goods – have never before been released.
In a submission to MPs on the Public Accounts Committee, Amazon said it normally only broke down its sales figures into ‘North America’ and ‘International’, in its accounts, meaning it is impossible to tell exactly how much revenue it gleans from UK consumers.
Amazon has admitted it made 3.35billion in sales in Britain last year – much higher than the 207million figure that it previously showed in its UK accounts
MP’s turned a deaf ear to entreaties from Amazon’s public policy director Andrew Cecil, who requested ‘confidential treatment’ for the letter. They published the figures on Parliament’s website last night.
Cecil was described earlier this month by Margaret Hodge, the Labour committee chair, as ‘not a serious person’.
The data showed that Amazon.co.uk made sales of 2.91billion during 2011.
In addition, the company raked in sales of 441m from LOVEfilm, the movie rental service.
The group’s UK profit was whittled down because of its huge ‘cost of sales’ such as staff and warehousing bills which were 2.69billion.
It also paid 151million to a European holding company for so-called ‘intellectual property’ such as using Amazon’s brand and logo to a European holding company.
During a three hour grilling Mr Cecil admitted that Amazon struck a deal with the Luxembourg government to base itself there for tax reasons.
He provoked fury and ridicule from the MPs when he refused to reveal its UK numbers, claiming not to know them.
But in a letter to the committee afterwards he supplied Amazon’s UK sales data for the past three years.
In 2010 the website Amazon.co.uk made sales of 2.36billion, and in 2009 it made 1.87billion, he revealed.
After Andrew Cecil, Director Public Policy at Amazon was grilled by MPs earlier this month, pictured, the true extent of Amazon's tax-scrimping in Britain has finally been exposed
He also said the company brought in 416million for the UK government in VAT.
A spokesman from Amazon last night said: ‘Amazon pays all applicable taxes in every jurisdiction that it operates within. Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites in a number of languages dispatching products to all 27 countries in the EU.
‘We have a single European Headquarters in Luxembourg with hundreds of employees to manage this complex operation.’
It came as Google, which was also lambasted by MPs on the Public Accounts Committee, claimed that it was ‘not immoral’ for avoiding more than 200million in tax.
The online search giant, which has an unofficial motto of ‘Don’t Be Evil’, was accused of scrimping taxpayers after paying just 6million to the Treasury last year on UK sales of 2.6billion.
UK chief executive Matt Brittin yesterday said: ‘I find it frustrating when we’re criticised because I’m not immoral and neither is Google… if Google were immoral,
I would not be working here… I’m proud of the way we operate.’
He told Channel 4 News that ‘Google plays by the rules set by politicians. The only people who really have choices are politicians who set the tax rates.’
Tax accountant Richard Murphy said: ‘We can see that Amazon is reducing its profits by 151million by inter-group payments. This is always open to challenge by HMRC – and this is a challenge that is long overdue.’