The Government is paying Amazon tens of millions of pounds a year for web services despite claims the tech giant is still not paying its fair share of tax.
Government figures show the public sector spent £11.8 million on Amazon Web Services in the first three months of 2018, suggesting the company could rake in almost £50 million from the Government this year if spending continues at the same pace.
Robert Palmer, executive director at campaign group Tax Justice UK, said: ‘It’s quite ironic that the Government is spending more on Amazon than it is paying in tax.
‘The biggest companies can hire really clever accountants to slash their tax bill, whereas hard-working families don’t have that choice.’
The Government is paying Amazon tens of millions of pounds a year for web services despite claims the tech giant is still not paying its fair share of tax
Amazon’s retail arm was at the centre of a row last week over its tax affairs. Its UK companies made modest UK tax payments in 2017 despite the huge scale of its activities here, and its true tax bill is hidden in Europe-wide companies based in Luxembourg.
Amazon UK Services, a subsidiary which supports the online retail business, paid £4.6 million in tax to the Exchequer last year.
Amazon says its overall payments are much higher than that because its Luxembourg business pays UK tax on its sales here, but the figures are not separately disclosed.
Richard Murphy, of Tax Research UK, said: ‘We have no idea where they’re paying what. We don’t know if they’re paying the right amount in this country.’
The online retailer reported sales of £8.75 billion in the UK in 2017, according to its US accounts. Amazon Web Services in the UK paid £1.4 million in tax, but it handles only a fraction of the payments from the UK Government, many of which go directly to the US parent.
Criticism of Amazon’s tax affairs has focused on the structure of its retail division. There is no suggestion Amazon Web Services was set up to minimise Amazon’s tax bill.
The tech giant is best known for online retailing but its cloud computing operation accounts for ten per cent of its global revenues and is the most profitable part of the business. AWS offers servers and data storage for companies which want to publish things online. Public sector payments to AWS have accelerated. The Government spent £17 million on the cloud computing service last year of the £30 million spent with Amazon since 2014. Amazon Web Services said it ‘pays all of the required taxes in the UK and all of the countries in which we operate.’
The public sector spent £11.8 million on Amazon Web Services in the first three months of 2018, suggesting the company could rake in almost £50 million from the Government this year
Its retail arm said its low tax bill reflected modest profits: ‘Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a competitive, low-margin business and our continued heavy investment.’
A Government spokesman said: ‘HMRC makes sure that large businesses, just like everyone else, pay all the taxes due under UK law and doesn’t settle for less. Last year, HMRC secured over £9 billion in additional tax revenue from the largest and most complex businesses. This is money that would otherwise have gone unpaid.
‘Robust processes are in place to enable Government departments to buy services and products through fair, open and transparent competition. This particular provider was the right choice for technical expertise and value for money.’