Amazon’s flagship Scottish centre, which received millions of pounds in publicly funded grants, is now owned in a tax haven, according to data obtained by The Ferret.
Figures from Registers of Scotland show that the Amazon distribution centre, just outside Dunfermline, Fife, is now owned by Spectre Property Company. Spectre is registered to an address in Jersey where no capital gains tax is payable, but it has not been possible to identify who ultimately controls the firm.
It was reported in 2017 that the Amazon warehouse was sold to Kuwait-based Kamco Invest for approximately £61m in 2017.
The site of the warehouse was originally owned jointly by public sector bodies Fife Council and Scottish Enterprise. They sold the site for £1m to a private company, providing £6.3m to for its development. It has since been sold twice – once in 2012 for £43.2m and again to Kamco in 2017, for a reported £61m.
Scottish Enterprise, which gave taxpayers’ money to Amazon, said the firm had created 950 jobs and that £52m had been invested in Scotland through the creation of the warehouse.
But politicians and tax experts said The Ferret’s findings raised serious questions over why tax-payers did not benefit more from the deal after an “explosive increase” in the value of the site. They also expressed concern that profits have been funelled through opaque deals with ownership of the centre now held offshore.
Amazon founder and chief executive officer, Jeff Bezos, is the world’s richest man whose net wealth was reported on 4 July to have risen to $171.6 billion. The company has been repeatedly accused of underpaying corporation tax in the UK.
Its vast Fife warehouse – said to be the size of 14 football pitches – opened in 2011 and holds millions of products.
In the planning stages Scottish Enterprise earmarked industrial land for the development, 67 per cent of which was owned by the government agency, 33 per cent by Fife council, and sold it to Aref Brazil, a subsidiary of the Infrared European Active Real Estate Trust Fund, for £1m.
In 2011, Scottish Enterprise announced that “up to £6.3m” had been allocated to support the construction of the warehouse.
A freedom of information (F0I) request by The Ferret in 2015 revealed that Amazon also received a Scottish Enterprise grant of £665,000 for the development of its fulfilment centre.
In May 2012 InfraRed sold the property for £43.2m, seemingly to Trixtax Amazon Limited. In 2017 it was reportedly sold to Kamco Invest for £61m. Scottish Enterprise confirmed it did not benefit from either of these deals and said no grants were paid back, as the company awarded them had “exceeded expectations” in terms of investment benefits.
Now the fulfilment centre is held by Spectre Property in Jersey, ensuring any future sales will not be subject to capital gains tax. Amazon reportedly has a lease on the warehouse until 2031. Amazon declined to comment on its relationship with Spectre.
The latest revelation is part of The Ferret’s investigation into foreign ownership of Scottish property. We previously reported that 60 per cent of foreign owned property was bought by companies based in tax havens, allowing them to avoid paying tax. These 1,851 companies paid £2.76 billion for the properties.
Substantial sums of public funds seem to have underpinned an explosive increase in property value, which has then been captured as purely private profit. Alex Cobham, Tax Justice Network
Alex Cobham, chief executive of the Tax Justice Network, said: “Substantial sums of public funds seem to have underpinned an explosive increase in property value, which has then been captured as purely private profit.
“Then that private profit seems to have been taken offshore and out of the scope of capital gains tax, without it ever being possible to identify the ultimate beneficial owners. This raises so many questions for Scottish Enterprise, Fife Council, Amazon and indeed for those behind the various opaque vehicles that have held legal ownership of this land at different times.
“As The Ferret rolls out this series of investigations, a growing number of concerning cases have been revealed – and in none of these does it seem likely that the wider public have benefited from the offshore ownership seen.”
Amazon has been repeatedly criticised for its lack of transparency around the tax it pays on UK sales, and accused of keeping it hidden from view with a web of companies in the UK, Luxembourg and the US.
Critics claim it separates “services” such as warehouses and fulfilment from retail sales on items purchased on its website, which are handled through Luxembourg to keep tax bills as low as possible.
Richard Murphy, professor of practice in international political economy at City University, London, and director of the Tax Research UK blog, said he was “very concerned” about the Amazon deal and the “worrying precedent” it set about the use of public money. He claimed it raised many questions, and highlighted the importance of transparency.
“We don’t know the details of this deal and who really owns the warehouse,” he added. “We end up with an opaque structure.
“The funding should have delivered complete transparency in terms of the use of public money but it has not,” he said. “So it is impossible for anyone to say whether it is a good use of it [public money] or not.
“It’s the lack of transparency which is critical here. Huge questions remain.”
There is much to do when large corporations look for any exploitable loophole to avoid paying back into society. Amazon must clarify what the relationship is with Spectre. Patrick Harvie, Scottish Greens
Patrick Harvie, Scottish Greens co-leader and finance spokesperson, said his party has “consistently pushed for action on subsidies for Amazon and other companies that move their money to tax havens”.
In May the Scottish Greens brokered a decision, voted through by the Scottish Parliament, to block companies based in tax havens from receiving coronavirus relief funding through emergency legislation.
Harvie added: “I was pleased that the Scottish Government eventually agreed to rule out regional selective assistance grants to firms in tax havens and introduce some fair work requirements, and we secured a commitment on emergency bailouts during the pandemic too.
“But there is much to do when large corporations look for any exploitable loophole to avoid paying back into society. Amazon must clarify what the relationship is with Spectre, who now owns the Dunfermline facility, which was developed with taxpayer subsidy.
Harvie continued: “Scottish Greens will continue to make the case to withhold wider forms of business support from tax avoiders, and to widen the definition of what constitutes a tax haven when making these decisions.”
Scottish Liberal Democrat leader Willie Rennie claimed only firms registered in the UK should qualify for grants.
He added: “Scottish Liberal Democrats have consistently questioned the Scottish Government’s decision to give out enterprise funding to one of the world’s biggest companies, particularly in light of their decision to shift ownership overseas.
“As we negotiate our way through the coronavirus crisis and the economic fallout, there will be increasing pressure to support businesses. This is a good moment to make clear what we expect of businesses in exchange for our support,” Rennie said.
Asked about the current ownership of its fulfilment centre and its ongoing lease, an Amazon spokesperson declined to comment on the details of the deal.
But they said: “Amazon is proud to be a significant contributor to the economy in Scotland, including investing hundreds of millions of pounds in our Scottish operations supporting over 2,000 competitively paid jobs at our development centre and customer service centre in Edinburgh, and fulfilment centres in Gourock and Dunfermline.
“Amazon fulfilment centre employees receive competitive pay and comprehensive benefits. Pay starts at £9.50 for all full-time, part-time, temporary and seasonal employees working in the company’s fulfilment centres. Employees are offered a comprehensive benefits package, including private medical insurance, life assurance, income protection, subsidised meals and an employee discount – which combined are worth more than £700 annually – as well as a company pension plan.”
A spokesperson for Scottish Enterprise confirmed that the £665,000 public subsidy had not been paid back, adding: “Amazon was offered a package of assistance in 2012 which resulted in over £52 million of investment and in excess of 950 jobs through its fulfilment centre in Dunfermline.
“The company met, and in some cases, exceeded conditions attached to the support provided and therefore has no requirement to repay any of the funds.
“Corporation tax is reserved to the UK Government and the support provided to Amazon had no conditions on UK tax payments.”
In 2016, it was reported that Amazon workers for the Dunfermline centre had to resort to sleeping in tents close to the warehouse in an attempt to save money. Facing sub-zero temperatures, workers said that they could not afford to travel to work as the company did not pay a living wage.
Accusations of poor working conditions, high pressure targets and lack of toilet breaks were also made. In 2017 Amazon launched tours of the warehouse, insisting it had nothing to hide.
In March the GMB Union claimed that people at Amazon’s UK fulfilment centres were terrified of contacting coronavirus. It was reported that hundreds of workers were forced to reuse equipment multiple times without hand sanitiser being available. One person at the Fife depot later tested positive.
This article has been amended to reflect the fact that Amazon now pays above living wage.