HM Revenue and Customs awarded a tax credit of just over £1 million to Amazon’s core UK division last year, despite the online retailer’s profits rising by almost 60% to $204 million.
The tax gain, which increased from €56 million a year earlier, was a portion of the €1 billion (£ 850 million) in tax credits that governments across Europe gave to Amazon, according to accounts submitted for the US company’s division based in Luxembourg.
Amazon’s losses in Europe increased by 90% to €2.1 billion before the tax break, despite a nearly 16% increase in sales to €51 billion.
Amazon rebuffed efforts to compel the corporation to be more open about its financial operations at the annual shareholder meeting in May.
According to accounts to be filed at Companies House, Amazon UK Services, the group’s warehouse and logistics operation, which is thought to employ more than half of its close to 75,000-person UK workforce, increased revenues by just over a quarter to £6.09bn.
However, after taking advantage of the government’s “super-deduction” program for companies that invest in infrastructure, which was introduced by the then chancellor, Rishi Sunak, last year, it recorded a rebate on “current tax,” also known as corporation tax, which is typically paid on profits.
Amazon received a refund on its prior year tax payment of £18.3 million in 2020 and had no further tax obligations in 2021 as a result of the relief, which enables businesses to deduct 130 percent of investment spending on plants and machinery against profits for two years starting in April 2021.
In terms of size, Amazon said its total UK revenues, which cover all business lines from retail to cloud computing services, increased by 12.6% to £23.2 billion last year. This puts the company slightly ahead of Asda, the third-largest supermarket in the UK, and more than twice as big as Marks & Spencer.
The amount that Amazon still won’t provide is exactly how much profit it makes overall in the UK and how much tax it pays on this, according to Paul Monaghan, CEO of the Fair Tax Foundation. This is in spite of numerous appeals from its institutional investors as well as activists in civic society.
“It looks that Amazon is expanding its market dominance throughout the world on the strength of income that is mostly untaxed, allowing it to unfairly undermine local enterprises that take a more responsible approach,” said one analyst.
In a statement, Amazon said: “The government aggressively encourages businesses to make investments in infrastructure and job creation through the taxation system. We made more than £11.4 billion in investments in the UK last year, constructing four new fulfillment centers and adding more than 25,000 employees.
“Since 2010, we have invested more than €100 billion in building infrastructure and creating employment across Europe. Corporation tax is based on earnings rather than revenues, and last year, despite opening more than 50 new sites across Europe and adding over 65,000 well-paid jobs that brought our total permanent workforce in Europe to over 200,000, Amazon EU Sarl still incurred a loss.
“We pay hundreds of millions of euros in business tax across Europe. From our headquarters in Luxembourg, where we employ over 3,600 people and are expanding, including our senior leadership team, we run our pan-European business.
Including employer’s national insurance payments, company rates, corporation tax, import duties, stamp duty property tax, and the digital services tax, Amazon claimed to have paid £648 million in “direct taxes” in the UK in 2021—an increase from £492 million the previous year.
The UK Services division is the greatest source for information on the tax burden because Amazon does not break down how much corporation tax it pays for the UK firm as a whole.