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Amazon finally paying its taxes directly to the UK

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Amazon

The month of May should see a significant boost for Her Majesty’s Revenue & Customs, with news Amazon is now paying its sales taxes directly into the UK’s coffers.

The company had been funneling all of its sales through its European tax haven Luxembourg, but as of May 1st the firm is paying their way in the UK, Spain, Italy and Germany, according to a Wall Street Journal report.

With the European Commission looking to take Amazon, Google and retailers like Starbucks to task over its practices, Amazon appears to have preemptively changed tact.

The change comes following the imposition of a new punitive ‘Google Tax’ by Chancellor George Osborne, which came into effect in April. The punitive measure charges a 25 per cent sales levy on companies like Amazon, it deems were bending the rules by sending earnings elsewhere.

The move is sure to cost Amazon a fortune in revenue, but it may encourage other tech giants on Europe’s hit list, like Apple which funnels its earnings through Ireland, to follow suit.

An Amazon spokesperson told The Journal: “We regularly review our business structure to ensure that we are able to best serve our customers and provide additional product and services.”

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The company refused to say whether the changes were due to the Google Tax or the threat of sanctions from the European Commission. Confirmation in the structure change comes after The Guardian reported it was taking place last week.

Alex Walsh

May 26, 2015, 6:50 am

It shouldn't cost Amazon a penny in revenue, or pre tax profit. Retained earnings (ie after tax), yes, but how on earth will it effect sales???

Menorca Man

May 26, 2015, 9:32 am

They will probably increase their European prices in order to retain their profit margin. I guess that could have a detrimental affect on sales.

LeeTronix

May 26, 2015, 10:28 am

The effect of retained earnings after tax as mentioned above I agree will be not that exponential but the sales in certain areas will be.

I would imagine that the secondary services such as shipping or prime etc which have already started to increase and similar services is where it will cost more. I guess they will also increase their commission hikes for businesses and offering them fewer incentives.

As for sales of products well I do not see that changing if anything it might be more cost effective in some cases but we might see over time a lot of products start to disappear.

If only the UK the conservative government reduced the VAT or did not break its promise of not raising it at the time, then this would surely be much more beneficial to the every day shopper and increase sales encourage more trade and amazon and the UK would benefit. Sadly we know the truth.

These companies come to Europe from mainly the states charge more by keeping the dollar to sterling costs the same more or less and then pay no tax, it is a disgrace and so they should be made to fall in line. I would take one step further and reflect the sterling costs based on exchange rates so we have a like for like fair price give or take.

PGrGr

May 26, 2015, 10:43 am

I think Amazon is being very shrewd here, but it won't have any practical effect on them. Amazon famously doesn't make a profit, so corporation tax (ie a tax on profits) will be zero, irrespective of where that profit is declared. The threatened sales tax, on the other hand, would have hit Amazon hard, as they reported worldwide sales of $89bn last year.

So, David Cameron comes out looking good, the high street still suffers because of Amazon's buying power and efficient delivery methods, and Google et al now look exposed. Clever!

toboev

May 26, 2015, 11:54 am

“We regularly review our business structure to ensure that we are able
to best serve our customers and provide additional product and
services.”

Honestly, why do they bother push out such meaningless cant?

Alex Walsh

May 26, 2015, 12:01 pm

It would be funny if prices went up as that would effectively mean their entire pricing structure was based on tax avoidance.

Honey Vig

May 26, 2015, 3:02 pm

OK , so amazon finally got something to pay a share

LeeTronix

May 27, 2015, 8:56 am

I think your spot on there and also this keeps all the those with vested interests making money while declaring small to zero profits.

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