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Amazon UK Gets Shouted At For Paying Too Much Tax

This is an interesting little reversal of the normal course of events. Amazon UK is being shouted at by the usuals for organising to pay too much UK tax. For that is the effect of how they’re organising matters and they are being shouted at. We must assume that those screaming their heads off are not entire and total idiots and that they are wailing about the right thing, that one that is actually happening.

Tim Roache, GMB General Secretary, said:

“This is another example of how Amazon has complete disregard not just for its workers – we know conditions in Amazon warehouses are dreadful – but the UK taxpayer too.

“Amazon’s dodgy tax set up might mean lower prices, but the true cost is now laid bare.

“They paid just £4.6 million on profits of £72 million – that’s just 6%.

“The Government are letting down the entire country by not sorting out the tax system.

“Services are at breaking point, the NHS, care service, education and local government struggling, we’re told there’s no money but we’re letting the richest man in the world get away with this.

“It’s shameful, and it’s wrong.”

That the GMB press release on the subject. Which is interesting, of course it is. For Amazon’s stealthy tax dodging method is to pay the workers more.

No, really, this “low” tax bill comes from the manner in which the company makes sure that the workers’ share the sweat of their brows, that value created by both hand and mind.

Amazon paid less corporation tax in the UK in 2017 even as it increased revenues and profits from its operations.

The company’s UK logistics arm, Amazon UK Services, paid just £4.6m in tax in the year ending December 2017, down from £7.4m the previous year, according to a filing on Companies House.

The lower payment to the UK taxman comes despite an increase in operating profit at the tech behemoth. Amazon’s UK operating profit grew to £79m up from around £26m the previous year.

Profits up, profits tax down, how can this happen? Even the Financial Times seems entirely mystified:

Amazon’s main UK subsidiary paid just £1.7m of tax on profits of more than £72m last year, after a massive deduction from share-based awards that offer a legal way for companies to reduce payments to the exchequer.

Had Amazon paid the UK’s standard rate of corporation tax, its UK Services subsidiary, which handles the logistics and warehouse operations, would have coughed up £13.9m in the UK.

The tax payment was adjusted down by £17.5m because of share-based awards, which have grown significantly along with increases to Amazon’s market value. That would have left the US group paying no tax in the year but the overall bill came to £1.7m as a result of other adjustments.

Well, not so much mystified as they explain it quite well, but they’re definitely still disapproving. And the FT, being the capitalists’ (no, don’t laugh!) rag should be disapproving. For look at what the company has done. It’s paid the staff so much that it doesn’t make a profit. There is no capitalists’ exploitation here. For the workers are getting all the money.

One reason for the lower tax bill was a rise in share-based payments for staff.

At which point, a little bit of explanation. Sure, an accountant will quibble with details here but for the rest of us normies. Equity, share awards, they’re part of paying the staff. That’s just how it works in the tech sector, compensation for doing the job is pay plus shares. But when we do the accounting we don’t count it quite like that. Pay is the stuff that appears in the wage packets each month. That’s an expense and we take that off before we count the profits the company makes. OK. Shares are also an expense, they’re also part of worker compensation. But we take that cost off after we’ve worked out what the profit is. But before we calculate the tax bill.

Declared profits are after wages and before the costs of share based pay and taxable profits are declared profits after the costs of share based pay.

And that’s it, that’s the whole story.

Although no, not quite. Because the tax on that pay – yes, including those shares – will be higher than the amount the company would have paid in profits tax if it hadn’t paid the workers more. So, in this method the Treasury is actually getting MORE money.

Yes, people are complaining that Amazon organises matters to pay more tax.

But quite the best complaint is that from the idiot, Tim Roache, isn’t it? Amazon isn’t paying lots of tax because the workers are getting all the money. Union leader insists this is an outrage.

The union movement might do better employing people with a brain, don’t you think?

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5 years ago

What is turnover like in amazon warehouses compared to similar jobs? We are told they are orrible places to work, would be nice to see some attempt to back that up.

5 years ago
Reply to  isp001

Every time there’s a vacancy at Amazon they get four hundred thousand job applications and a queue from here to Land’s End so I wonder how dreadful the working conditions really are.

5 years ago

So, another entity “evading taxes” by doing things that are tax-favored (gifting shares to employees): By doing exactly what the government has indicated it wants them to do.

This is another anecdote that shows that unions do not exist to improve the conditions of workers. They are parasites that exist to advocate for growth of the Parasite Sector, as they are advocating here, with the spotty claim that the shortage of needed services such as NHS could be relieved by a simple new appeal to envy.

5 years ago

I had to read the linked Beeb story to learn that the staff who are getting the shares are run-of-the-mill full-time warehouse shitkickers, not just white-collar execs. Without this detail the story loses all its punch.

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