'Ridiculous, rubbish, outrageous, complete bollocks': Just some reviews for Amazon's corporate contribution to Blighty's coffers

The Reg chats to Dame Margaret Hodge MP about box slinger's tax affairs

Interview Amazon's latest PR efforts to paint itself as a responsible corporate citizen in the UK have been branded "complete bollocks" by Dame Margaret Hodge MP, a long-term critic of the online giant's tax practices.

Hodge – chair of an all-party Parliamentary group for responsible tax – has form when it comes to Jeff Bezos' empire. You may remember she was a bit grumpy about the giant back in 2018, when Amazon squeezed out just £1.7m in corporation tax as profits nearly trebled to £72.4m, so we were naturally curious to see what she'd make of this year's accounting.

The tech giant's profits for its UK Services subsidiary climbed again, but only by around £3m to £75.4m, far less than the bonanza of the previous year. However, even with the modest increase, Amazon actually managed to pay even less tax – handing over £1m to the UK tax office this time around.

Perhaps in anticipation of yet more criticism of its tax practices, early this month Amazon kicked off a charm offensive by preempting the publication of its UK figures with a press release that reminded Brits why we are lucky to have Amazon grace us with its presence.

Contained within this perfectly cut sculpture of facts and stats, Amazon pointed out that we shouldn't just look at corporation tax. After all, what about all that VAT and "the taxes paid by our employees through PAYE"?

"Complete bollocks," was the terse response from Hodge, who added: "It's ridiculous," when we mentioned those "indirect taxes" such as those paid by the giant's lucky, lucky workers.

It's fair to say Dame Margaret is not impressed. "All of us as individuals pay a variety of taxes. We all pay our council tax, and we pay VAT.

"We don't think that absolves us from the duty of paying our income tax."

By comparison, she was less than enamoured by the antics of some of the tech giants: "For companies like Amazon to try and argue that they shouldn't be paying a tax on the profits they've earned from the activity they've undertaken in this jurisdiction, because they pay other taxes, it's rubbish."

Hodge went on to list the benefits bestowed on Amazon by dint of being in Blighty, including healthy and educated workers, thanks to the cash spent by UK taxpayers on the NHS and schooling; the broadband infrastructure used to order stuff from the retail store; and, of course, the transport infrastructure used to ship gear around the country.

"So they have a duty," Hodge told us, "to contribute if they expect to benefit from public expenditure.

"And for them to have the gall not to pay their fair share, and yet to benefit is an added insult to all the honest and upright taxpayers."

As for that corporate tax bill? It "just beggars belief."

While Amazon did not share the detail of where the 2018 figures come from, it said it paid £220m in "direct taxes" on revenues of £10.89bn. It also highlighted £573m in indirect taxes (like PAYE).

The giant would also, of course, point out that its affairs are all above board and perfectly legal.

Hodge's concern is that large corporations such as Amazon are able to work with HMRC to keep things as, er, efficient as possible. "I have no confidence," she said, "that everybody is treated equally.

"What I believe happens in that coming to those deals, there is unequal treatment between businesses. So some will probably not find any flexibility and interpretation of the rules. Whereas Amazon probably will."

Certainly, we could use some of the accounting smarts available to the likes of Amazon when paying our taxes. And those advisors were not spared the ire of Hodge either.

"I think," she mused, "I would make the advisors far more accountable for the advice they give, which leads to this aggressive tax avoidance, than they currently are. They give it with impunity and they are never made responsible when some of these little loopholes they have exploited are then found to be outside the law."

It would be a brave government indeed to attempt such a thing.

When we approached Amazon with queries about how it secured agreements with HMRC and the apparent discrepancies between its own tax arrangements and those of smaller companies, it told us: "We are investing heavily in creating jobs and infrastructure across the UK – more than £18bn since 2010. The UK has now become one of Amazon's largest global hubs for talent and this year we announced plans to create 2,000 new jobs in the country, taking our total workforce to over 29,500. This investment helped contribute to a total tax contribution of £793m during 2018 – £220m in direct taxes and £573m in indirect taxes.

"We pay all taxes required in the UK and every country where we operate, and focusing on one small piece does not provide a full picture of Amazon's overall contribution to the UK. Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive, low-margin business and we continue to invest heavily."

Hodge had some positive observations as well, noting that the culture is changing and businesses are starting to recognise the reputational hit on the bottom line caused by fancy footwork in the tax return: "From it being seen to be cool not to pay tax, to it being seen to be socially responsible to pay your taxes."

However, that needs transparency. Amazon, as an example, has shunted several operations abroad, so it has become progressively more difficult to work out what its true revenues are. The unalloyed figures provided to the UK Companies House only tell a part of the story.

Dame Margaret reckoned that transparency was key, with country-by-country reporting so "that we could see openly where they make that money, then we could judge whether they're paying the fair tax rate that parliament decided companies should pay on the profit they make."

"Europe," she said, "is being very robust in demanding transparency, on where profits are earned and where money is made."

Of course, the UK is due to exit that club at some point in the future.

How about at home? Hodge, an MP for the opposition party in the UK, expressed a fervent desire for "a determined government to make sure that whether you're a big corporation or high net worth individual, you pay what is a fair proportion."

And, of course, to make things a lot more transparent. This counts for politicians too on both the left and the right. Or at least, it should. ®

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