Online retail giant Amazon paid no corporation tax on its European sales in 2020, despite annual revenue reaching almost €44 billion.
According to a company filing from Amazon’s Luxembourg unit, the firm made a loss of €1.2 billion euros for 2020. Amazon EU Sarl handles sales across the UK, France, Germany, Italy, the Netherlands, Poland, Spain, and Sweden.
Not only did that mean it had to pay no corporation tax for the year, but the company also received €56 million of tax credits to offset future profits. In total, Amazon EU Sarl has €2.7 billion of tax credits from the Government of Luxembourg stored up to use against any future profits.
The 23-page company filing did not break down how much money Amazon made from sales in each European country. The filing has led to claims that Amazon is not paying a fair amount of tax on its earnings.
In comments to the Guardian, chief executive of the Fair Tax Foundation Paul Monaghan said: “These figures are mind-blowing, even for Amazon. We are seeing exponentially accelerated market domination across the globe on the back of income that continues to be largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach.
“The bulk of Amazon’s UK income is booked offshore, in the enormously loss-making Luxembourg subsidiary, which means that not only are they not making a meaningful tax contribution now, but are unlikely to do so for years to come given the enormous carried forward losses they have now built up there.”
The likes of Italy, France, Germany and the IMF have come out in support of the Biden-Harris tax proposals. But so far we have heard nothing of substance from the UK Gov’t. This matters enormously as the UK is hosting the first face-to-face G7 gathering in two years in June (8/n)
— Fair Tax Foundation (@FairTaxMark) May 4, 2021
According to an Amazon spokesperson: “Amazon pays all the taxes required in every country where we operate. Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low margin business.
“We’ve invested well over €78 billion in Europe since 2010, and much of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue, and supports small European firms.”
The coronavirus pandemic drove up Amazon’s revenues across 2020 as more and more people were driven to shop online. Sales in Europe for 2020 rose by €12 billion from 2019’s €32 billion.
Across the world, Amazon had its first-ever $100-billion quarter, making $125.6 billion in the final three months of 2020. In the UK for 2020 as a whole, Amazon made just under £20 billion in 2020, almost double what it made in 2019, according to a breakdown from the company’s US accounts.
The company has not stated how much corporation tax it paid in the UK for 2020, but in 2019 it paid £293 million on $17.5 billion of revenue.
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The pandemic has also helped Amazon through the shift to remote and online working.
This drove the company’s cloud computing division Amazon Web Services (AWS) to make revenues of $45.3 billion in 2020, up almost 30% compared to 2019. This in turn made over $13.5 billion in operating profits for the company, contributing around 63% of Amazon’s operating profits for 2020.
Amazon currently anticipates that it will see another $100-billion quarter in the first three months of 2021, increasing sales from the first quarter of 2020 by around a third.
Earlier this year, UK Chancellor Rishi Sunak floated the idea of taxing online retailers under a so-called ‘Amazon Tax’. In addition, with lockdowns driving shoppers online, online retailers are profiting at the expense of high street shops. This led to calls for a tax on excessive profits made by online retailers.
The calls were echoed by Tesco Chief Executive Ken Murphy, who called for a 1% tax rate to be levied against online retailers.
Whilst not part of the March 3 budget, the tax was touted to form part of a business rates review for later this year.