Amazon has been criticised for paying less in business rates than British bricks and mortar retailers.
The online retail giant’s financial results revealed that UK sales for 2020 totalled $26.5bn (£19.3bn) – a 51% jump from $17.5bn in 2019.
Amazon’s overall business rates bill for 2020-2021 is estimated by researchers to be £71.5m – just 0.37% of its retail sales.
They say this is far lower than what the retail sector typically pays.
Amazon insists that it pays its tax and has created thousands of jobs in the UK.
Business rates are calculated by looking at a property’s rateable value and multiplying it by a tax rate set by the government. A new tax rate comes into effect at the start of each financial year on 1 April.
According to figures from the Office for National Statistics (ONS), full-year retail sales at physical shops for the 12 months ending 31 December 2020 fell 10.3% from £318.5bn in 2019 to £285.8bn.
Retail advisor Altus Group says that bricks and mortar retailers would have paid £8.25bn in business rates in 2020, had they not been given a tax holiday due to the pandemic.
It says the figure was calculated using rateable values, multiplied by the 2020 tax rate. The £8.25bn figure amounts to 2.9% of total retail sales, which is much higher than what Amazon pays.
For instance, Arcadia – which owns Topshop, Burton and Dorothy Perkins – would have had to pay £91m in business rates on its 444 stores in 2020, had there not been a tax holiday, Altus Group says.
A Treasury spokesman said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.
“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”
Separately, the Centre for Retail Research (CRR) calculated the business rates paid by physical shops in 2019 and found that they paid £7.17bn in business rates, or 2.3% of their total retail sales in 2019.
The two organisations said that Amazon, which has close to 100 sites in the UK, including distribution warehouses and lockers on High Streets, is not paying enough tax.
However, their calculations do not include corporation tax, which is currently at 19% of profits.
Debate over digital services tax
Amazon would not comment on the calculations made by Altus Group and CRR.
A spokesman for Amazon said: “We’ve invested more than £23bn in jobs and infrastructure in the UK since 2010.
“Last year we created 10,000 new jobs and last week we announced 1,000 new apprenticeships. This continued investment helped contribute to a total tax contribution of £1.1bn during 2019 – £293m in direct taxes and £854m in indirect taxes.”
The government is currently reviewing the way in which the business rates system works, and is also separately considering a 2% tax on online sales and services.
But business lobby group the Confederation of British Industry (CBI) has warned that any tax rises would place additional pressure on businesses that are already struggling due to the pandemic.