Amazon makes BEELLIONS from British customers, pays pennies in tax

Amazon paid just £1.8m in corporation tax in the UK despite racking up a pre-tax profit of £74m on £3.35bn sales in 2011, according to figures the web giant wanted to keep secret.

MPs probing the company's minuscule corporation tax bill demanded to see Amazon's profit numbers as well as its sales performance, and published the details despite the company labelling them "non-public" and "confidential".

Amazon added its LoveFilm operation and "other business activities" to its UK sales, amassing a total of £3.35bn in 2011, up from the £2.91bn it had earlier admitted for the year, but its pre-tax profits were just £74m.

However, Amazon didn't even pay corporation tax on this figure in Blighty: instead it footed the tax bill for just its Amazon.co.uk Ltd subsidiary, which manages its warehouses, bringing its corporate tax payment to a bargain-basement £1.8m.

That's 2.4 per cent of all Amazon's UK pre-tax profits collected in the UK, far below the 2011 official corporate tax rate of 26 per cent.

Operating expenses - spent on staff, rent and so on - hit £417m and ate into the sales revenue along with "intercompany charges" of £151m for intellectual property, £12m in stock-based compensation for UK companies and £7m in "other expenses".

The intellectual property fees are paid to a European holding company based in Luxembourg, which is in turn owned by three different Amazon firms based in the US.

Amazon handed over its profit figures to Parliament's Public Accounts Select Committee after the company's director of public policy Andrew Cecil and representatives from Starbucks and Google were grilled by MPs. Cecil said at the time he didn't know Amazon's financial figures for the UK.

The firm prefers to report its European earnings as a whole without breaking down the numbers by country. The figures given to Blighty's Companies House only relate to the fulfilment warehouses dotted around the UK. Amazon claims that inventory and payment processing are done at one of its many European companies, which gets all the profits.

Cecil promised at the parliamentary hearing earlier this month to provide further information, which he has done in two documents while urging the committee to treat them confidentially. The MPs ignored those requests and published them online. ®