As we know, Amazon is under constant political attack from both sides:
1. The lefties complain that Amazon is not paying enough VAT or corporation tax.
Under current rules, Amazon's £4.2bn annual sales in the UK, which rely on a network of eight mega-warehouses across Britain, are routed through Luxembourg. Revenue & Customs has no taxing rights over any profits from those sales.
If they route their sales through Luxembourg, so what? They just pay VAT in Luxembourg instead (at 15%). It was the UK government's decision to increase VAT from 15% to 17.5% to 20% a few years ago; they decided that they'd get more tax from businesses who can't relocate that lose in tax from those which can. That's the Laffer Curve for you.
Also, by and large, the remaining profits are still very much liable to corporation tax in the UK (or else why would Amazon be paying any UK corporation tax at all?). Amazon does not appear to make much in the way of profits, so far their strategy is all about 'grabbing market share', that's why their bill is so low.
2. The rent-seekers complain that Amazon is not paying enough in Business Rates:
Sainsbury's chief executive Justin King has attacked the government for creating an unfair burden on high-street retailers by not doing more to tax online-only rivals such as Amazon.
He called for a level playing field and said politicians should take action or risk seeing the high street shrink further. King said: "The burden of taxation in the UK falls very heavily on bricks-and-mortar retailers versus internet only retailers."
Let's gloss over the fact that Amazon is not "internet only", it's glorified mail order. All Amazon's suppliers pay Business Rates and Amazon has to pay Business Rates on its "eight mega-warehouses" (if we knew the full addresses we could look up the rates bill at the VOA) and existing offices, but here's an interesting bit of news:
Amazon is quitting its UK base of 16 years in Slough and moving to a 15-storey corporate office on the outskirts of the City of London.
The 600,000 sq ft building, known as Principal Place, will be just north of Liverpool Street station.
Righty-ho.
Average Business Rates in the City of London are £18 per square foot, so that means that Amazon will be, quite voluntarily, be paying £10 million tax to the government, on top of the £30 million privately collected tax it will be paying to its new landlords.
I wonder whether the lefties or the rent seekers will ever give Amazon credit for all the VAT they pay in Luxembourg and all the Business Rates they'll be paying in London, on top of normal PAYE payments and the £4 million-odd UK corporation tax?
Ah... thought not.
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This scenario also illustrates that while businesses will do their best to minimise the amount of tax they pay on turnover or profits, they are - by definition - not fussed about paying market rent inclusive of taxes on rental values.
Amazon are prepared to pay £40 million a year to occupy that site. They do not care whether they pay £40 million in rent; £30 million in rent and £10 million in Business Rates; or indeed £10 million in rent and £30 million in Business Rates. The matter is simplified if we assume that their new building belongs to Crown Estates or some other government/national body.
That's another KLN demolished!
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