Amazon Charges HMRC More than It Pays in Tax
HMRC paid Amazon £11 million for web hosting services in 2018, more than six times the £1.7 million than Amazon’s main UK business paid in corporation tax.
A new report from the GMB union reveals that Amazon received more than £460 million worth of public contracts in the last four years.
This total includes three deals worth £26 million from HMRC, which is almost half of the £61.7 million in corporation tax paid by Amazon in the last 20 years.
Last year, the UK tax authority was the second-biggest spender on Amazon services among central government departments, just behind the Home Office which spent nearly £16 million.
The most recent contracts were awarded after Amazon almost halved its corporation tax bill from £7.4 million in 2016 to £4.5 million in 2017. After deferring a large portion of their tax liability, Amazon UK Services only paid £1.7 million in corporation tax for the year.
Amazon Web Services (AWS) provides the infrastructure behind websites including data hosting in the cloud.
The cloud computing arm of Amazon only paid £155,000 in corporation tax in 2017 and £404,000 in 2016.
Speaking about the contracts, a government spokesperson said that procurement decisions were based on “value for the taxpayer, capability, security and reliability of service.”
They continued: “We also make sure that large businesses, like all other taxpayers, pay all the taxes due under UK law – there are no special deals and we don’t settle for less.”
Amazon countered the reports saying that less than 1% of the government’s annual IT budget was spent on its services.
A spokesperson continued: “In line with the Treasury’s own guidance, public bodies have a responsibility to ensure that the services they procure from the private sector represent good value for money to the taxpayer, and that’s what they’ve found with AWS. Government departments using AWS are seeing a 40% to 60% cost saving. They could choose more expensive or less reliable options, but that would be a disservice to their constituents.”
There has been some recent controversy about the close relationship between the government and Amazon.
Two senior government officials recently left their posts to join Amazon Web Services’ international government transformation division.
Miles Grady, Director of Cloud Accountant said: “Cloud-based information services like those offered by Amazon’s cloud computing division offer better value for money for organisations and, in this case, taxpayers.
But the awarding of huge contracts to a company that’s perceived to not pay their fair share in tax will leave a sour taste in taxpayer’s mouths. Every company we work with would love to receive more from HMRC than they pay in tax.”
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