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
Whether a member of EU or not, European countries ought to standardise company tax rates to cater for multi-national companies.
This well be an on-going battle between countries and multi-national companies.
Tax avoidance is the absolute duty of any individual or company where government levies excessive taxes which are largely wasted through inefficiency or simply squandered. Unfortunately most of us don’t enjoy the same opportunities for tax avoidance.
Of course those opportunities must still be controlled in the low tax economy which we need and deserve.
Who might have been the architect of the Luxembourg laws which allow this plundering of the UK’s due tax payments? Could it have been no less a person than “The Tottering Toff of Europe” himself, Jean-Claude Juncker? Such laws were definitely agreed there whilst he was the duchy’s head honcho. Embarrassingly for him a lowly clerk working at Price Waterhouse Cooper, Antoine Deltour, blew the whistle on the Totterer’s plans and promptly got himself arrested. Imagine, a prison cell for telling the truth in Europe. The affair become known as the LuxLeak papers for those wanting to know more. These were further incriminating facts not widely trailed pre-referendum. I wonder why.
Amazon didnt destroy the high street , ridiculous rents , ridiculous rates , ridiculous parking charges , VAT inspections , IR inspections , ludicrous employment rules , employers NI contributions , service charges , vandalism , all contributed to the fate of small business’s in towns . You would be better off blaming councils for allowing huge out of town retail parks to spring up. That took the guts out of the high street which then saw town centres the length and breath of England all look the same. Gone were the wonderful individual shops all to be replaced by the same boring pattern of big retailers. Then along came the internet. Do you know it is far easeir for me to find something on line that I actually need. Many is the time in the past few years I have wanted something and cant find a shop within 20 miles that has what I want. Amazon didnt destroy the high street , they just applied the old business model, find a need and satisfy that need.
Blame the governmemt for the tax returns from the likes of Amazon, Google and all the other major tax avoiders. If they cannot introduce laws and implement them that is the governments fault, not Amazons.
Don’t blame Amazon, blame the system that allows it to happen, which includes exorbitant high street rental costs and business rates.
Besides, it’s not a case of the “British people are being cheated out of tax income”, it’s the government being cheated out of tax income and seeing the way successive governments have squandered our taxes, I’m not particularly bothered if they receive less: starve the beast, I say.
The more money they can steal from us in the form of taxes, the more ways they will find to spend it.
I am not aware that Amazon are doing anything unlawful.
The way I see it is, Amazon, Costa et al, can pay (say) 50 percent tax in Britain or (say) 15 percent tax in Luxemburg. Even an economist can see what to do in this situation.
It is a bit like shooting your Mum and Dad and then complaining you are an orphan.
Governments have always done this sort of thing in many areas.
Tom Jones halved his tax bill by moving to California.
Tax exile Gérard Depardieu fled France to avoid 75% rate of tax on incomes over one million euros. He is now an honorary Belgian citizen – paying no tax to France.
And let us not forget the entourage of the above two – gardeners, chauffeurs, house keepers and cleaning brigade – all employed and paying tax to somewhere outside the grasping Government clutches that drove them out.
Perhaps I could have worded it better, yes, the government is being cheated out of tax income, by not closing the tax loopholes it allows to exist (to serve its corporate masters), but then due to this dwindling tax income, the British taxpayers are being cheated, because it is they who end up facing ‘austerity’ and tax increases.
The Tories, in their 2017 GE manifesto, promised not to increase taxes for the ‘ordinary working person’. Notice how since the ‘NHS Crisis’ that people have been softened up into accepting a tax increase to ‘help the NHS survive’?
David Cameron once claimed “we’re all in this together”. Looking back, that does not now have the meaning it was intended to portray.
Try – the government is taxing income till the pips squeak due to over feeding behemoths such as the NHS, government depts, and local councils.
It’s not just Amazon. Here’s a unintended consequences thought for you. A few years ago the government fined people 100 pounds for getting their tax returns in late.
The following year, some 15 pct of those fined ”disappeared” and no longer pay tax.
BTW – the greatest number of letters I receive in a month are from the Homeless Muslim Rehousing Commission (HMRC).
I am not aware that Amazon are doing anything unlawful. I’d do the same if I could.
I have read many of your comments on this site SJ, and respect your thoughts and comments.
This time you are shooting at the wrong target.
Big Government applies taxes to feed their voracious appetite. Amazon et al owe it to themselves and to shareholders to avoid unreasonable tax burdens.
Lastly, maybe it would be better to propose this as UKIP policy.
Whatever you say about Amazon, people know that Amazon-approved sellers are genuine. A month ago I ordered a pack of bulbs from an outfit advertising cheap LEDs. It’s a fraud. Before ordering anything off a site you are unfamiliar with and is not Amazon-approved read the Trustpilot reviews.
This is part of the perception, that only Amazon delivers excellent service and only Amazon can be trusted with your purchase. Trust me, even Trustpilot reviews can be ‘bought and paid for’, and same goes for any other type of review site. My mum has been scammed by Amazon sellers in the past, so don’t think it can’t happen. By the way, there is no such thing as an ‘Amazon-approved’ website, there are websites that offer Amazon Payments as a payment option at checkout, where you can use your Amazon account to pay for goods (as you would if you had a Paypal account), but even so Amazon is still collecting a fee for transactions made outside of its platform.
It is unforgiveable that the state allows this kind of tax avoidance. This must be addressed immediately or heads should roll.
As for the challenging Amazon’s mighty marketshare this must be done through more competiton. The big four supermarkets were thought to be unassailable until Aldi and Netto and other challengers came along.
The state’s priorities should be to stop squandering, stop interfering where it is not necessary and cutting taxes by a substantial amount. That would also require a crackdown on cronyism and outright corruption.