Amazon Dunfermline

Amazon pays more tax to Fife Council than to the UK government

Amazon pays more to Fife Council in rates and rent than it does to the UK government in corporation tax, prompting calls for the internet giant to pay its “fair share of tax.”

Amazon’s latest accounts for its UK-based retail business show that it paid £1.7 million UK corporation tax in 2017-18 on earnings of £72 million.

But figures obtained from Fife Council by The Ferret under freedom of information law show the firm paid a total of £2.1 million in rates, plus an additional £23,000 in rent to the local authority in 2017.

Amazon’s distribution centre outside Dunfermline – said to be the size of 14 football pitches – generates more than £2 million per year in rates for Fife Council alone. The firm also pays an additional £8,500 in rates for a “service site” at Halbeith, also near Dunfermline, and a few hundred pounds per year for lockers in Kirkcaldy and Dunfermline.

2017 payments to Fife Council from Amazon

Rates - Amazon distribution centre, Dunfermline£2,106,216
Rates - Old Kingdom Service Site, Crossgates Road, Halbeith£8,510
Rates - Lockers Kirkaldy and Dunfermline£392
Rent - Old Kingdom Service Site£23,000
Source: Freedom of information requests

One tactic Amazon has used to cut its UK corporation tax bill to £1.7 million was the use of shares to pay some staff. This cost can be offset against its tax liability to Her Majesty’s Revenue and Customs (HMRC), the government department responsible for collecting UK taxes.

However, the agency workers that are bussed in to supplement the workforce in Fife do not qualify for Amazon shares.

The GMB trade union has criticised the Scottish Government for handing the US firm millions of pounds in grants whilst turning a blind eye to poor working conditions and low pay among workers.

The Ferret previously reported that the Scottish Government awarded Amazon £7.5m in grants between 2005 and 2015.

GMB claims the Dunfermline site has one of the worst safety records of any UK Amazon site. Allison Cairns, GMB Scotland organiser, said: “There were 75 serious incidents recorded there in just three and a half years.”

In 2018 the Scottish Government pledged to reform the criteria firms must meet before they can be considered for financial support, in an effort to encourage firms to pay all their workers the real living wage.

Scottish Labour leader, Richard Leonard MSP, condemned Amazon. He pointed to the “shocking record on workers’ pay and conditions,” adding that he would also ban firms from accessing government grants if they failed to pay enough tax.

“Amazon is not paying its fair share in tax,” he said.

“The SNP government should be doing everything it can to ensure fair labour conditions – instead ministers have channelled millions of pounds of taxpayers’ money to a company which is making millions on the back of tax avoidance.”

He added: “The next Scottish Labour government will reform the grants system to ensure public money only goes to businesses to who treat their workers with dignity and who pay their fair share of tax.”

In January HMRC officials began writing to some large businesses that they believe “may be diverting profits away from the UK” in a bid to crackdown on aggressive tax avoidance.

If these businesses cannot convince the UK government that they have not deliberately sought to avoid tax, or if they do not respond, they could find themselves subject to a new “diverted profits tax” charge.

HMRC said that it did “not comment on identifiable taxpayers.” But a spokesperson added: “We make sure that large businesses, just like everyone else, pay all the taxes due under UK law and we don’t settle for less. HMRC actively investigates around half of the UK’s largest businesses at any one time.”

The Scottish Government pointed out that pay legislation is a reserved matter for the UK government but added that officials were in a “continued dialogue” with Amazon in a bid to ensure that jobs at the firm were “qood quality” ones.

“We expect all employers in Scotland to treat workers fairly and we encourage them to pay the real living wage,” said a government spokesperson.

“There is an increasing evidence base demonstrating the benefits of fair work to workers and to business. Through our fair work first approach, by the end of this parliament, we will extend fair work criteria to as many funding streams, business support grants and public contracts as we can.”

The Scottish Government stopped short of pledging to withhold government cash from firms involved in aggressive tax avoidance.

“Amazon has brought a significant number of jobs to Scotland and we are in continued dialogue with the firm to ensure these jobs are of good quality and pay rates are in keeping with our ambition to see the real living wage replace the national minimum wage,” the spokesperson added.

Amazon defended its record on safety and fair pay. “According to the UK government’s Health and Safety Executive Amazon has over 40 per cent fewer injuries on average than other transportation and warehousing companies in the UK,” said a company spokesperson.

“Amazon has created more than 27,500 good jobs in the UK with a minimum pay rate starting at £9.50 per hour or £10.50 per hour depending on location on top of industry-leading benefits and skills training opportunities, and has recently been named by LinkedIn as the top company in the UK to work for.”

On tax, the spokesperson added: “We pay all taxes required in the UK and every country where we operate. In May 2015, to ensure we had the best business structure to serve our customers going forward, we established a local country branch of Amazon EU Sarl in the UK, with all retail revenues, expenses, profits and taxes due now accounted for in the UK.

“Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly-competitive, low margin business and our continued heavy investment. We’ve invested over £9.3 billion in the UK since 2010 including in 2017 opening a new head office in London alongside development centres in Cambridge and London.

“Last year we created 2,500 permanent jobs across the country in research and development, our head office, customer service and fulfilment centres, to bring our total workforce in the UK to over 27,500.”

Cover photo: Amazon Dunfermline | CC | Scottish Government / Chris Watt |

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