Amazon to start paying corporation tax on UK retail sales | Amazon

Amazon has become the first tech company to abandon controversial corporate structures that divert sales and profits from the UK in the face of a crackdown imposed by George Osborne.

Since the start of this month, the online retailer has started booking sales through the UK, meaning any resulting profits will be taxed by HMRC. The group made $8.3bn (£5.3bn) in global sales to UK online shoppers, but for the past 11 years all of those internet transactions have been restricted to Luxembourg.

A spokesperson said Amazon “now records retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg.”

The move will help Amazon avoid being caught by Chancellor George Osborne’s new diverted profits tax, which came into force in April. It imposes a punitive 25% tax on groups deemed to artificially funnel profits overseas.

Amazon has denied for years that its UK corporate structures were artificial or tax-driven. The move will be welcomed as a victory for the Chancellor, who last September underlined his determination to rein in tech companies that go to extraordinary lengths to avoid UK tax. “You are welcome here in Britain with open arms,” ​​he said.

“Although we offer some of the lowest business taxes in the world, we expect those taxes to be paid.”

Referring to the Diverted Profits Tax – which has become popularly known as the Google Tax – he added: “If you abuse our tax system, you abuse the trust of the British people.” A number of other countries are considering copying Osborne’s diverted profits tax.

Amazon’s latest moves will pressure others to follow suit, particularly Google, which routes its sales through Ireland. Representatives from Amazon and Google suffered two deadly clashes with the House Public Accounts Committee over the arrangements.

Committee chair Margaret Hodge told Matt Brittin, Google’s Northern Europe boss, that her company’s tax behavior was “sneaky, calculated and, in my view, contrary to the ethics “.

She added, “You’re a company that says you ‘do no harm.’ ‘, which appeared in its US$23 billion IPO prospectus in 2004.

The bashing of Hodge, who announced last week that she was stepping down from the committee, is widely credited with sparking widespread public outcry, which, in turn, pressured the chancellor to act. Amazon confirmed changes to its tax affairs after the Guardian reported on Friday that its two top UK executives had quietly resigned as directors of the online retailer’s main UK company in the face of Osborne’s crackdown.

Christopher North, Amazon’s UK chief executive, and Rob McWilliam, who joined Asda as chief financial officer two years ago, resigned from the Amazon.co.uk Ltd board on May 1. may.

North and McWilliam remain senior executives despite stepping down from their directorships, with the former continuing as country manager and UK Amazon director, while McWilliam is UK vice-president of the consumables division. .

The company said: “We regularly review our business structure to ensure we are able to better serve our customers and provide additional products and services. Over two years ago, we began the process of establishing national branches of Amazon EU Sarl, our main retail operating company in Europe.

Sales are still registered by Amazon EU Sarl, a company registered in Luxembourg, but – especially for tax purposes – will be registered at a UK branch of that company, for which a tax return must be filed with HMRC.

A year ago, North claimed in an interview with the Guardian that Amazon’s European corporate structure was not determined by tax avoidance strategies, insisting it would be impossible to route sales to UK customers through a UK company paying tax to HMRC. “We just couldn’t do that,” he said. “And a single European company will need a single European headquarters.”

Amazon.co.uk Ltd’s latest accounts show sales of just £449m for 2013 and a tax charge of £4.2m. Elsewhere in its corporate filings, however, Amazon attributed $7.29bn (£4.71bn) in global net sales to the UK for the same year.

The British company employs thousands of people, many on low wages, in its warehouse network, as well as many in sales, supply and marketing. However, its income comes from services provided to Amazon EU Sarl, and it does not deal with UK online customers.