Online retail giant Amazon has fuelled further anger over its tax bill as it emerged the group’s UK business paid just £11.9 million in tax last year, despite the group taking £5.3 billion in sales from British shoppers.
The firm, which employs more than 7,700 people in the UK, saw sales in this country rise 14% last year, according to filings in Companies House.
But its Amazon.co.uk subsidiary recorded a profit of just £34.4 million, and so paid tax of £11.9 million.
Amazon’s UK sales, which represent 9.4 per cent of its global turnover, are taken through the group’s Luxembourg arm, called Amazon EU Sarl.
Sales from many countries in Europe are booked at its Luxembourg business, and are not taxed in the country where the shopper carried out the transaction.
This controversial structure, which allows technology companies to divert sales out of major economies, avoiding tax on any consequent profits as a result, has led to a string of tax reform initiatives.
The G20-led reform programme, being carried out by the Organisation for Economic Co-operation and Development, signalled its determination to end the practice two years ago.
These wide-reaching reforms are still being fine-tuned, with further developments expected later this year.
Meanwhile, George Osborne has pre-empted the G20 project on the issue of diverted sales and profits as exploited by Amazon. In April the chancellor introduced a punitive 25 per cent rate for those companies artificially shifting sales and profits overseas.
The so-called “Google Tax” is designed to discourage large companies from diverting profits out of the UK to avoid tax.
Mr Osborne said the new tax measures were expected to raise £3.1 billion over the next five years.
Labour MP Nick Smith, a member of the Public Accounts Committee during the last parliament when it investigated tax avoidance, said the Government must crack down on the problem.
He said: “It’s just not good enough. George Osborne needs to pull his socks up and get to grips with this.
“Amazon has to pay its fair share. Of course it’s complicated but Osborne needs to get his best Treasury geeks to do a job of work on Amazon.”
Last week, Amazon announced plans to open a new depot in Washington, Wearside, which will create more than 200 jobs.