Amazon Looks At Doing Its Tax Dance All Over Again

Written by Frank Hayes
November 28th, 2012

Amazon’s “level playing field” is back. On Tuesday (Nov. 27), a U.K. Parliamentary committee published Amazon’s sales, profit and tax payment figures for the U.K., while executives at big U.K. chains called for Amazon to pay more taxes—and for a level playing field. (Gee, where have we heard that before?)

The Amazon financials (which were supposed to be confidential) showed 2011 U.K. sales of $5.36 billion, which is just a tad higher than the $331 million in revenue that Amazon UK officially reported and paid corporate taxes on. But that playing-field line—and the obvious irritation of MPs on the Public Accounts Committee—makes it pretty clear Amazon has more trouble ahead.

Amazon’s head U.K. lobbyist, Andrew Cecil, couldn’t come up with U.K. sales numbers at a public hearing in mid-November, and he later sent over the numbers, labeled “confidential” and “non-public.” The committee published them anyway: $4.64 billion in sales from the Amazon Web site, with another $72 million from Amazon’s LoveFilm and other U.K. operations. Total profit: $118.5 million.

The official numbers for Amazon UK, previously filed with the British government, showed revenue of $331.4 million, but that’s after the accountants filtered it through Amazon’s complicated European cross-border corporate structure. That’s what Amazon UK paid $2.9 million in corporate taxes on.

Meanwhile, executives from brick-and-mortar chains Sainsbury’s, Morrisons, John Lewis and Dixons called for Amazon to pay more taxes. “We want a level playing field,” said Morrisons Finance Director Richard Pennycook.

OK, that’s pretty much what every retailer with stores says about Amazon when it comes to taxes. In the U.S., when the issue was state sales tax, Amazon danced deftly through different strategies in different states, ranging from a lawsuit in New York to a ballot initiative in California and lots of build-a-warehouse horse-trading in other states. Eventually, Amazon has agreed to collect sales tax in most of those states, which hasn’t made a noticeable dent in Amazon’s sales.

In the U.K., that divide-and-dance strategy may not be so useful, especially because there’s just one legislature involved and it’s also going after chains like Walmart-owned Asda, which also uses complicated accounting to cut its official revenue in legal ways. And it’s not an optimistic sign for Amazon that MPs called it “immoral” and wouldn’t go along with Amazon’s confidentiality requests.

Those posh accents? Apparently not as much a sign of politeness as Amazon was expecting. Which raises the next obvious question: Exactly how many warehouses will Amazon have to build to make Parliament happy?


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