Controversy over multinationals paying little UK tax despite huge British sales continues with Amazon the latest in the spotlight.

The firm, which employs more than 7,700 people in the UK, saw sales in this country rise 14% last year, according to filings in Companies House.

However its Amazon.co.uk subsidiary recorded a modest profit of just £34.4m, and so paid tax of only £11.9m.

Amazon’s UK sales, which represent 9.4% of its global turnover, are taken through the group’s Luxembourg arm, called Amazon EU Sarl.

Under current rules companies can shift profits across borders to take advantage of tax rates that are lower than in the country where they made the majority of their profits.

Likewise, Apple, Google and Starbucks have all been criticised for low tax payments.

According to the OECD, some multinationals end up paying as little as 5% in corporate taxes, while many smaller businesses are paying up to 30%.

Multinational companies are able to exploit the fact that tax systems are still essentially nation-based and were designed for the ‘old’ economy where companies were less global, and before the huge changes brought about by the internet.

Under mounting pressure, Amazon said last month it had begun booking UK sales in this country, which could mean it pays more taxes in future.

Details of its 2014 tax bill in the UK attracted criticism from the TaxPayers’ Alliance.

Jonathan Isaby, chief executive of the alliance, said: “You can understand people’s anger at organisations like Amazon perceived not to be paying their fair share, but our frustration should be focused at the politicians and bureaucrats who have created our ludicrously complicated tax code.

“It is so riddled with loopholes and exemptions that those who can afford to find them will be able to.

“It’s time for a radical simplification of the tax code to make it easier to administer, to make the line between ‘avoidance’ and ‘evasion’ more obvious, and with fairer and lower taxes across the board.”

In April Chancellor George Osborne said firms that move their profits overseas to avoid tax will be subject to a “diverted profits tax”.

The so-called ‘Google Tax’ is designed to discourage large companies from diverting profits out of the UK to avoid tax.

Global giants including Apple, Google and Starbucks have all come under fire for low tax payments in European countries where they enjoy high levels of business.

Mr Osborne said the new tax measures were expected to raise £3.1bn over the next five years.

About The Author

Editor-in-chief

Founder of TechFly - lover of technology, food and tea.

Related Posts