Thursday, May 16, 2013

Amazon: Still tax cheats

Last year internet bookseller came under fire for cheating on its UK taxes. Like many multinationals, Amazon routes its UK sales through a foreign tax-haven - in this case Luxembourg - in order to shift its revenue and profits to a lower-tax jurisdiction. This robs the UK government of hundreds of millions of pounds of revenue, and is a direct cause of the vicious austerity that country is suffering under.

Amazon's tax cheating is predicated on a claim that their Luxembourg subsidiary does not actually do business in the UK. But it turns out they've been lying about that:

Among the key indicators of whether a business is taxable in the UK is the location of those negotiating deals. A UK publishing executive confirmed that his contract was negotiated on behalf of Amazon EU Sarl, the Luxembourg company, by staff from the British head office in Slough.

"The contract may be with Luxembourg but it is the people from Slough who thrash out the crucial details of the contract such as the discount we agree to give them. There are also people in Slough who are charged with overseeing that the contract is properly executed," the executive said.

Meanwhile, job adverts posted this month on the careers page of invite application for scores of roles in the UK. Among them is a vacancy for a senior financial analyst. "Based at our UK Head Office in Slough, Amazon seeks a Senior Financial Analyst to support Amazon UK's Merchant Services business," the advert said.

There are more details here. The short version: it looks like Amazon's Luxembourg subsidiary trades in the UK from a fixed place of business, making it a "permanent establishment" whose activities should be taxed. The question now is why HMRC have allowed them to get away with claiming they do not.