Amazon Faces Criticism As it Reaped $530 million in UK Government Contracts Without Paying Taxes

Sophie Webster, Tech Times 24 May 2022, 11:05 am

Amazon has reportedly reaped a total of £425 million or $530 million in U.K. government contracts since 2020.

This prompted fresh criticism that the tech giant is failing to pay its fair share of tax in the country.

Amazon Criticized Over Tax Payment

According to The Guardian, the report was submitted by the Center for International Corporate Tax Accountability and Research or CICTAR, with assistance from investigative thinktank Taxwatch.

The report showed taxpayers are increasingly supporting Amazon's highly profitable cloud computing business through hundreds of billions of dollars in government contracts around the world.

In the United Kingdom, Amazon benefited from £250 million or $311 million of government contracts in 2020, which is an increase from zero in 2014 and less than £25 million or $31 million in the four subsequent years, according to CICTAR.

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That was more than ten times the level of corporation tax paid by the group's main British subsidiaries in that year, according to TimetoTimes.

Amazon's publicly published corporation tax bill in the U.K. totaled £22.3 million or $27 million in 2020. The corporation tax bill of Amazon included the Amazon U.K. Services, Amazon Digital U.K., and Amazon Online U.K.

Another £175 million or $218 of government contracts were booked in 2021. The figures for the corporation tax paid for 2021 are not yet available.

George Turner, the Taxwatch executive director, said that the tech giant's history of tax avoidance is very well known, but despite this, the company was able to bag a massive increase in revenue from the work that it does for the government.

Turner said that, at the very least, taxpayers would want some reassurance that their money is spent on companies that are transparent about their tax affairs and demonstrate that they do not use artificial structures to reduce their tax bills.

Turner added that the last Queen's speech announced a new bill to reform government procurement. This would seem to be the perfect time for the government to make sure that those in receipt of lucrative government contracts also make their contribution to the tax system.

In the U.K., the Amazon Web Services or AWS arm provides services, for the Home Office, HMRC, and the Ministry of Defense, according to 24SevenMagazine.

The contracts include cloud computing services for MI6, MI5, and the Ministry of Defense, including sensitive document storage.

The report says that while the U.K. government has taken some measures to tax profits generated in the U.K. but booked offshore, there is no evidence that these measures have been effective at all.

Amazon Responds to Criticism

Amazon said that the calculations are misleading and do not include the bulk of their business. Comparing a contract value over the years to an incorrect corporation tax figure for a single year is highly misleading.

An Amazon spokesperson said that they have been investing in creating jobs and infrastructure across the U.K. since 2010.

This continued investment helped contribute to a total tax contribution of £1.55 billion or $1.93 billion during 2020, £492 million or $614 million in direct taxes, and £1.06 billion or $1.34 billion in indirect taxes.

The direct taxes include employer's national insurance, business rates, stamp duty, and corporation tax.