Date:05 April 2012
Amazon may face investigation from UK tax authorities
Amazon is facing a possible enquiry into the amount of corporation tax paid on billions of pounds of sales in the UK. The company reportedly recorded sales of over £7.6bn in the UK over the past three years and it is alleged that it may not have paid corporate tax on the profits from these sales.
Ownership of Amazon.co.uk was transferred to Amazon EU in 2006, which is based in Luxembourg, where tax rates are lower than in the UK. Therefore, the e-retailer’s UK operation is classed as a service company to the parent company based in Luxembourg, which employs 134 people, according to the latest 2010 accounts. Amazon’s UK operation employs 2,265 people.
A filing made by Amazon in the US states that, “the effective tax rate in 2011, 2010 and 2009 was lower than the 35% US federal statutory rate, primarily due to earnings of our subsidiaries outside of the US in jurisdictions where our effective tax rate is lower than in the US”.
Amazon is currently being investigated in six countries relating to its tax affairs, including the US, Luxembourg, China, Japan, Germany and France.