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Amazon: UK retail shops slammed Jeff Bezos’ company for paying far lower tax than them

Photo by: Christian Wiediger/Unsplash

Amazon is an American company that sells online, and the retail giants in the U.K. are criticizing it for only paying far less rates compared to them. The retail companies that operate through brick and mortar stores are shouting “unfair” since they are earning less than Jeff Bezos’ company, and yet, they are the ones paying higher tax rates.

Retail stores complaints against Amazon’s tax rates

Although Amazon has a license to operate in the U.K. and also paying fees to do so, High Street retail stores and most of the retail sector are disappointed because they are paying more, yet they are already suffering financially. On the other hand, Amazon’s UK sales for 2020 have reached $26.5 billion, which is a big increase compared to its 2019 profits of $17.5 billion.

Despite these earnings, industry experts estimated that Amazon's business rate for bill 2020-2021 is £71.5 million. This is only .37% of the company’s total retail sales.

As per BBC News, based on the numbers from the Office for National Statistics (ONS), the sales in the brick and mortar shops in the U.K. fell by 10.3%. For the entire 12 months of 2020, the sales went from £318.5 billion in 2019 to £285.8 billion.

Even with the drop in profits, Altus Group, a retail advisor, stated that physical stores would still have to pay a total of £8.25 billion in taxes for 2020. Fortunately, they were granted a tax holiday because of the COVID-19 crisis that badly affected their businesses.

With the figures given, it is obvious that Amazon is paying less, so the retail sector is really upset about this. In reply to the criticisms, Jeff Bezos’ company said that it is paying its taxes correctly in the United Kingdom while also creating thousands of jobs for its citizens.

"We've invested more than £23 billion in jobs and infrastructure in the UK since 2010,” Amazon’s rep said. "Last year we created 10,000 new jobs and last week we announced 1,000 new apprenticeships. This continued investment helped contribute to a total tax contribution of £1.1 billion during 2019 - £293 million in direct taxes and £854 million in indirect taxes."

Call for business rates revamp

It can be recalled that top brands such as Dorthy Perkins, TopShop, and more have already shut down their brick and mortar stores, and the companies have already been acquired by online fashion retail stores as a result of the lockdowns. Whereas Amazon continues to gain, especially now that people are opting to shop online.

Thus the difference in business rates has been brought up and is now being debated over. Retailers want the right balance in rates, so it is asking for the review of the digital services tax.

Some of the UK’s largest retailers, such as Asda and Tesco, have called for Rishi Sunak, UK’s Chancellor of the Exchequer, to “rebalance the tax base” between online and physical retail shops in an obvious drive for a new digital sales tax on companies like Amazon.

In a letter sent to Sunak, the Daily Mail reported that 18 chief executives and union chiefs have pointed out that online retailers pay a lower proportion of rates compared to bricks and mortar store owners. They are asking the chancellor to do something about this so they can also survive. With the request, it appears that Amazon may be paying higher rates in the future as the digital market sales tax is likely to be revamped.

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