Despite a Profit Increase, Amazon UK's Tax Bill Dropped to £4.6 Million

By Tom Pritchard on at

Last year Amazon Services UK generated a £48 million profit and paid a measly £7.4 million in tax, which pissed off a lot of people. Those people are going to be furious this year, because the company was handed a tax bill of £4.6 million - despite profits rising to £80 million. That said it's only having to pay £1.7 million, with £2.9 million being deferred until a later date.

Apparently this lower bill was down to Amazon offering its staff more share-based payments. A spokesman told BBC News that staff have received an average of £1,000 worth of shares each year for the past five years. According to the Guardian Amazon's rapidly rising share price meant staff received, on average, £3,000 worth of shares last year.

Tax law says that companies are required to deduct the best value of shares provided to employees, and due to Amazon's increasing value that means those shares account for a significant deducation. Especially when you consider Amazon Services UK has around 27,000 employees.

An Amazon spokesperson said the company paid all the tax it was required to "in the UK and every country where we operate", emphasising that "corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive, low-margin business and our continued heavy investment."

Even though profits increased by £32 million. Ok then.

This bill only accounts for Amazon UK Services, which manages the warehouse and logisitics operations. Amazon proper will have a different bill from HMRC, but we have no indication what it might be. Amazon hasn't revealed how much UK tax it paid last year, though documents from the US suggest it generated $11.3 billion (£8.69 billion) in revenue here. It's also worth remembering that retail sales go through a different company, which is based in Luxembourg. [BBC News | The Guardian]