Amazon has raked in a total of £425m from UK government contracts over the past two years, it has emerged in a report, sparking fresh criticism that the tech giant is not paying a fair share of taxes in the country.
The report, from the Center for International Corporate Tax Accountability and Research (CICTAR) with the help of investigative think tank Taxwatch, finds that Amazon’s highly profitable cloud computing business is increasingly being indirectly supported by taxpayers through hundreds of billions of dollars in government contracts around the world.
In the UK, Amazon received £250m from government contracts in 2020 – up from zero in 2014 and less than £25m in the following four years according to CICTAR. This was more than 10 times the level of corporation tax paid by the group’s main UK subsidiaries that year.
Amazon’s publicly released corporation tax bill in the UK – for its largest subsidiary Amazon UK Services as well as Amazon Digital UK and Amazon Online UK – was £22.3 million in 2020.
A further £175m of government contracts have been earmarked in 2021. Figures for corporation tax paid last year are not yet available.
George Turner, executive director of Taxwatch, said: “Amazon’s tax avoidance story is well known, but despite this the company has managed to get a huge boost in revenue from the work it does. with the government.
“At the very least, taxpayers will want to know that their money is being spent on companies that are transparent about their tax affairs and demonstrate that they are not using artificial structures to lower their tax bill.
“The latest Queen’s Speech announced a new bill to reform public procurement. This strikes me as the perfect opportunity for the government to ensure that those who receive lucrative government contracts are also contributing to the tax system.
In the UK, the Seattle-based company’s Amazon Web Services (AWS) arm provides services to the Home Office, HMRC and the Ministry of Defence. The contracts include cloud computing services for MI6, MI5 and the Ministry of Defence, including the storage of sensitive documents, according to the report.
The report states: ‘Although the UK government has taken steps to tax profits generated in the UK but booked overseas, there is no evidence that these measures have been effective.’
Amazon said that “the calculations are misleading and do not include most of our business. Comparing the value of a contract over many years to an incorrect corporation tax figure for a single year is very misleading.
An Amazon spokesperson said: ‘We are investing heavily in creating jobs and infrastructure across the UK – over £32billion since 2010. This continued investment has helped contribute to a total tax contribution of £1.55 billion in 2020 – £492 million in direct taxes and £1.06 billion in indirect taxes.
The £492million in ‘direct taxes’ – up from £293million a year earlier – includes employer national insurance, business rates and stamp duty as well as corporation tax .
The company added that UK government departments using AWS were “realizing cost savings of up to 60%.” A spokesperson said: “Public sector organizations in the UK use the UK branch of AWS Europe which registers its sales in the UK and pays all applicable taxes, due on its profits, directly to HMRC.”
A UK government spokesperson said: “Amazon Web Services is just one of many government cloud service providers, and our buying decisions are always based on delivering value for taxpayers and the best quality services.”
In Australia, Amazon’s AWS branch has won contracts worth A$626m (£498m) since 2013, according to the research.
This includes a deal with the Digital Transformation Agency, which is supposed to drive improvements in federal government technology, under which Amazon will receive A$560 million between 2019 and 2025, as well as deals with the Revenue and Revenue Service. a contract to run the government. Covid-19 tracking app, which is widely seen as a failure because few people have used it.
In the US, the report says Amazon is believed to have recently signed a $10bn (£8bn) contract with the National Security Agency. The company set aside just over $2 billion for U.S. federal taxes last year according to the company’s annual report, but kept its effective tax rate low with $1 billion in tax credits. tax and other benefits.
Amazon said its U.S. taxes “reflect our commitment to investing in innovation, our people, and our communities.”
The findings come ahead of Amazon’s annual shareholder meeting on Wednesday, where the technology group faces pressure from shareholders for greater transparency over its tax affairs. Investors will also vote on a shareholder proposal calling for an independent report on working conditions at its warehouses, a move backed by shareholder advisory group Glass Lewis.
The Greater Manchester Pension Fund and Oblate International Pastoral Investment Trust, backed by independent UK-based shareholder advisory firm Pirc, presented the tax transparency resolution which was publicly backed by institutional shareholders including Norges Bank.
Amazon recommended shareholders vote against the proposal, Amazon said it had already made public its tax contribution in some countries, including the UK, in its recommendation document ahead of the AGM.
He said greater ‘granularity’, on tax reporting, as provided for in new EU rules, ‘would potentially force the disclosure of competitively sensitive information about our operations and corporate structures. costs and impede our ability to make operational decisions.”
Tom Powdrill, Head of Stewardship at Pirc, said: “There is a real risk of changes in tax regulations and wider public policy trapping companies and their investors, so transparency is vital. Amazon was designated by President Biden as having paid no federal corporate income tax in the United States in 2020. His reports [to shareholders] does not disclose revenues, profits or tax payments in non-U.S. markets and it has not responded to the prior shareholder undertaking.
Michael Wyrsch, chief investment officer of Australia’s Vision Super pension fund, which manages around A$12 billion in retirement savings, said the fund would vote in favor of a resolution.
“Businesses don’t operate in isolation from communities and corporations and if you don’t pay any taxes you end up having nothing… you don’t have a corporation,” he said.
He said Vision was also concerned about the company’s high executive compensation, which is partly based on profit.
“All this information is available to the tax authorities, we should be able to see what they are doing. We should be able to judge, to assess the quality of the work they do.