I came across the following articles concerning Amazon, and I must admit, I got “triggered” (again!)
Daily Mail: Amazon has nearly HALVED its tax bill to just £4.5m despite seeing sales in Britain soar to £2bn a year – as it stands accused of crippling our high streets.
Daily Mail: Fake store fronts now lining the high street devastated by online shopping… just five miles away from Amazon’s gigantic warehouse.
I’m not surprised at all by this, as I have found the antics of Amazon quite abhorrent for several years now. Personally, I only ever use Amazon to buy Kindle books now, not for any other type of product.
It is appalling to read that Amazon is paying relatively little tax, but what is more appalling is the manner in which they are able to get away with it.
Amazon slashes its UK corporation tax bill by taking advantage over Britain’s ageing tax laws and a complicated network of companies in the EU.
The online giant funnelled cash made from sales across all its European businesses – including £1.98billion from the UK – through a company based in Luxembourg.
This company then pays ‘royalties’ to another of its businesses based in the small European country.
The American tech giant then uses the costs of its branding and services to cut the remaining profits which it can be taxed for at a lower rate than in the UK.
Meanwhile, the royalties paid to the separate entity are not taxed because it is a type of business not considered a tax resident in Luxembourg.
Unlike some European countries, Britain also allows companies to take generous deductions for stock options and share awards and many companies, especially in the technology sector, use the rules to reduce their tax bills significantly.
‘We pay all taxes required in the UK and every country where we operate,’ Amazon said in a statement.
Is it fair to say that the British people are being cheated out of tax income by these big greedy corporations, aided and abetted by our own government? While we all have to ‘dig a little deeper’ and have to endure austerity* and tax increases to pay for public services being starved of cash.
The second article I linked to also highlights the issue with business rates.
It (Amazon) pays business rates for its Swansea warehouse based on a valuation of just £27 a square metre. The Waterstones bookshop in the city itself is assessed at £600 a square metre – 22 times more – according to real estate adviser Altus Group.
I don’t know how Amazon managed to get its business rates valuation that low (bulging brown envelopes perhaps?), but again they have an unfair advantage over other local retailers. How on earth can a traditional high street retailer compete on price against a giant like Amazon, which uses clever accounting to hide its profits, pays its workers barely the minimum wage, and pays much lower business rates?
But let’s face it, Amazon to many people is the first place to go when shopping, whether online or offline. Amazon’s mission is to offer the lowest price. Who wouldn’t want to get something they wanted at the cheapest price possible? I have heard of people who visit ‘bricks-and-mortar’ shops just to have a browse, then find and order the same product from Amazon.
Amazon versus Marketplace Sellers
I work for an online retailer that sells products through various marketplace platforms, including eBay and Amazon. We dispatch our products ourselves, rather than sending them to Amazon’s Fulfilment Centres (FBA – Fulfilment By Amazon, or otherwise known as ‘Prime’ to shoppers), due to the prohibitive costs charged by Amazon. For the privilege of selling on their platform, Amazon also charges us a ‘commission’ (up to 15% of the sale value) which we pay every time an item sells.
So yes, it can be a struggle to compete, especially if Amazon also sells the same product themselves. I don’t imagine Amazon charges itself any commission fees, or fulfillment charges, which is why their price is often much lower than that of other competing sellers. In fact sometimes, when I look at Amazon prices, based on what I know we pay from our suppliers, Amazon must be selling products at a loss or making absolutely no profit.
But as for us, in order to compete (and we do a modest amount of business through Amazon), we have to work on very slim margins, and I can tell you that with the fees we have to pay, Amazon makes far more from each sale than we do!
To be continued in Part II tomorrow on UKIP Daily