Online giant Amazon has begun to pay corporate tax on British sales in the UK instead of Luxembourg, following chancellor George Osborne’s new diverted profits tax coming into effect last month.
Also known as the ‘Google tax,’ the new tax was announced by the government last autumn and is aimed at multinational companies like Amazon who “artificially shifted” their profits abroad to lower their tax bill. The e-commerce site is just one of the many online firms that has been accused of avoiding UK tax by routing its sales through an overseas company. HM Revenue and Customs are now able to claim taxes on sales made by Amazon in the UK.
According to a statement seen by the Financial Times, Amazon said it had started “the process of establishing local country branches” of its main retail markets in Europe, Amazon EU Sarl, more than two years ago. The online retailer added: “As of May 1, Amazon EU Sarl is recording retail sales made to customers in the UK through the UK branch. Previously, these retail sales were recorded in Luxembourg.”
However, the online firm stressed that corporation tax is based on profits and not revenues, which could indicate it payments would be manageable. “Ecommerce is a low-margin business and highly competitive, and Amazon continues to invest heavily around the world, which means our profits are low.”
The change in tax comes after Amazon’s finance director and managing director for the UK both stepped down from their roles. Finance director Rob McWilliams and managing director Christopher North, who joined the online retailer from Asda two years ago both resigned from the board earlier this month. McWilliams has been appointed as vice president of consumables, whilst North is to remain head of Amazon in the UK.