Boris Johnson Confronted Amazon Founder Jeff Bezos On Concerns Over E-Commerce Giant’s UK Tax Bill
© AP Photo / Ross D FranklinIn this Nov. 11, 2010 file photo, the Amazon.com logo adorns an Amazon.com fulfillment center in Goodyear, Ariz., one of several centers in the Phoenix metro area to open in recent years. The issue of whether Amazon.com should be required to collect tax on online sales to Arizonans isn't going away. State legislators considered but ultimately shelved proposals to force the online retailer to collect tax on its sales in Arizona. But the issue is expected to resurface publicly within the next few months when a newly appointed state task force considers making recommendations for legislative action in 2013.
Earlier, an official spokesman had confirmed that Prime Minister Boris Johnson intended to discuss the “important issue” of Amazon’s low tax payments in the UK with the company’s founder Jeff Bezos on the fringes of the United Nations General Assembly in New York this week.
"The prime minister raised the issue of taxation, and hoped progress could be in implementing the G7 agreement on tax," a Downing Street spokesperson said in a readout of the meeting.
Johnson had earlier acknowledged he would “certainly” tackle concerns over Amazon’s taxes in the UK with the billionaire, ahead of his flight to the US.
“You can expect the Prime Minister to raise this important issue. We have been an advocate for an international solution to the tax challenges posed by digitalisation of the economy… we will very much be looking to raising that,” the British Prime Minister’s official spokesman had told reporters.
Amazon’s ‘Tax Shenanigans’
Amazon’s relatively low tax bill in the UK has been a contentious matter for years, but amid the coronavirus pandemic and ensuing restrictions that have driven online sale, the issue has gained prominence. Microsoft, Apple and Google all posted similarly soaring sales as people have become increasingly reliant on technology.
Ecommerce giant Amazon had reported up to £8.2bn of its UK sales in Luxembourg, according to accounts and public statements analysed by union Unite and cited by The Independent in August. 19 of Amazon’s UK-registered companies, including warehouses, logistics operation and smaller businesses such as the Internet Movie Database (IMDb) had their accounts analysed in the course of the inquiry. Using information publicly disclosed by Amazon, experts estimated just how much UK tax the company was possibly dodging.
© AFP 2021 / DENIS CHARLETIn this photograph taken on November 18, 2020 in Lille, a person poses with a smartphone showing an Amazon logo, in front of a computer screen displaying the home page of Amazon France sales website.
In this photograph taken on November 18, 2020 in Lille, a person poses with a smartphone showing an Amazon logo, in front of a computer screen displaying the home page of Amazon France sales website.
In its US accounts, the company had declared £13.7bn of UK sales in 2019. However, in filings for its UK-based companies, Amazon, which is not required to publicly disclose where sales were actually made, had only reported £5.5bn in sales, says the report.
UK Labour MP and Treasury committee member Emma Hardy had called for a probe into the “missing” billions. The report by Unite emphasised that Amazon reaps huge advantages by legally shifting revenues from where it does business to where it chooses to pay tax.
Nicholas Shaxson, co-founder of the Balanced Economy Project, was cited as saying:
“Monopolies generate huge profits, and tax havens hide evidence and cut the tax bills on those profits… Amazon’s shenanigans in Luxembourg are a classic [example] of how our markets and tax systems have become corrupted.”
Global Tax Reform
Amid concerns that big tech giants are able to skirt higher taxes by re-routing profits through low tax jurisdictions, or tax havens, the British Government has been planning a 2 percent tax on digital sales outside of America targeting Amazon and other tech giants. Earlier, a “historic” deal was reached by G7 finance ministers in June in what was hailed as a huge overhaul of international tax rules.
Championed by the Organisation for Economic Cooperation and Development (OECD), the measure would force the world's largest companies to pay a minimum global corporate tax rate on their profits of at least 15 percent, hoping to seal off tax loopholes for global businesses such as Google, Apple and Amazon.
© REUTERS / REUTERS FILE PHOTOThe logos of Amazon, Apple, Facebook and Google in a combination photo. File Photo
The logos of Amazon, Apple, Facebook and Google in a combination photo. File Photo
© REUTERS / REUTERS FILE PHOTO
The latter would be required to pay more tax in the markets they sell goods and services. G20 finance ministers backed the deal in July, releasing a communique stating they had reached agreement on a “more stable and fairer international tax architecture.” So far, 134 countries have signed up to the OECD’s “Inclusive Framework,” with a number of countries still showing reservations over the terms of the deal.
Resistance is most likely from British overseas territories like Bermuda, the British Virgin Islands and the Cayman Islands, accounting for 18.1 per cent of the world’s corporate tax abuse risks, according to the Tax Justice Network. Low tax European jurisdictions like the Netherlands, Switzerland, Luxembourg and Ireland would also stand to lose out if the legislation is adopted, claim experts.