Amazon pays just £63m in business rates despite £8billion worth of sales… a third that of John Lewis
- US retail giant Amazon was forced to reveal its tax bill by MPs last night
- Amazon does not rely on actual shops, cutting the tax it pays on premises
- But rivals say it has an unfair advantage in taxes created before online sales
Amazon pays just £63million in business rates in Britain despite recording sales of £8billion, it emerged last night.
The tax bill was a closely guarded secret until the US retail giant was forced to reveal it by MPs.
Its publication angered other retailers who pay far more – despite lower sales.
The bill is legitimate because Amazon does not have to rely on actual shops, cutting the tax it pays on premises.
But rivals say this gives it an unfair advantage, and taxes created before the advent of online sales need replacing.
High street stores paid far more in business rates than Amazon.
Amazon pays just £63million in business rates in Britain despite recording sales of £8billion
Debenhams and Next were hit with an £80million bill last year on UK revenues of £2.3billion and ££4billion respectively.
John Lewis, which includes Waitrose, paid £172million based on sales of £10.2billion in 2018, while Marks & Spencer handed over £184million to the Treasury after making £9.6billion in sales.
Jake Berry, the minister for the high street, admitted last night that the business rate regime was unfair, telling MPs on the committee: ‘It doesn’t seem that is creating a level playing field to me.’
The crisis has been put under the spotlight by the Daily Mail’s Save Our High Streets campaign following thousands of job losses and swathes of store closures in struggling town centres.
Firms such as Amazon typically rely on massive warehouses in cheap areas, where rates are far lower than for large stores in prime high street locations.
Experts have warned that 10,000 shops could shut this year as traditional stores battle to survive.
HMV blamed a ‘tsunami’ of challenges, including soaring business rates, after it crashed into administration last month. It paid £15million on sales of £277million – meaning 5.4 per cent of sales went on business rates, compared with 0.8 per cent at Amazon.
The Treasury has pledged £900million in business rates relief for smaller high street firms. But critics have said the proposals do not go far enough.
Sports Direct tycoon Mike Ashley has warned that the internet is ‘killing the high street’ and called for an online sales tax.
The Treasury has pledged £900million in business rates relief for smaller high street firms. But critics have said the proposals do not go far enough
Critics urged the Government to take action on business rates last night to ensure internet giants such as Amazon paid their fair share. Sir John Timpson, chairman of locksmiths Timpson and author of a report into the state of the high street for the Government, claimed the solution was to axe business rates and increase VAT in such a way that levelled the playing field. He added: ‘There is far too much of an advantage on internet shopping.’
Robert Hayton, head of business rates at the management consultancy Altus Group, said: ‘Traditional bricks-and-mortar retailing is property intensive.
‘Their reliance on property leads to a larger tax to turnover ratio that, if left unchecked, will lead to further deterioration of our high streets and local communities. Our system of business rates was created nearly 30 years ago, before the advent of online shopping.
‘With the UK having the third largest e-commerce market in the world, it is vital the Government develops a coherent approach to taxing the digital economy.’
Labour MP Clive Betts, chairman of the Commons housing, communities and local government committee, which forced Amazon to reveal its business rates bill, said: ‘There is a significant difference in the rates companies pay based on whether they operate online or have a high street presence.
‘Ensuring a level playing field will be vital if we are to create an environment where our high streets can thrive.’
A spokesman for Amazon, which has also been criticised for how much corporation tax it pays, said: ‘Last year, Amazon paid local authorities in England and Wales over £63million in business rates for the sites we use.
‘Business rates, which are just one of a number of taxes Amazon pays in the UK, are based on the rateable value of the land a business uses. These payments are just part of Amazon’s broader £9.3billion investment in the UK since 2010, which includes creating 2,500 jobs last year.’
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