Amazon shares ended lower Friday in the US, as it was disclosed the global tech giant paid less tax in the UK during 2017 than it did in 2016. While Amazon said it pays the right amount of tax in the UK and every other country it operates, there was some criticism of the business and the UK’s tax system.
Amazon shares ended the US Friday trading session 0.60% lower at $1,823.29. The stock is also a little lower in after-hours activity, after climbing higher earlier in the week in the wake of reporting record quarterly profits of $2.5 billion.
Amazon’s UK tax bill
A new SEC filing last week from Amazon showed that its UK service division had a UK tax bill of $4.6 million in 2017, down from $7.4 million in 2016. That lower tax charge came despite the well-known etailer’s increased profits.
However, an Amazon spokesperson said the figures and payments were 100% correct.
“We pay all taxes required in the UK and every country where we operate,” an Amazon UK spokesperson said.
“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,” the spokesperson added.
And, while the bill for 2017 was between $4 and $5 million, due to a tax payment deferral system, Amazon has actually only paid the UK $1.7 million of the total 2017 bill, so far.
Why so low?
While Amazon rightly states that its tax bill is only based on profit, there has been plenty of uproar over the company’s lower tax bill. However, the UK’s current rate of corporation tax is 19%.
And some Government members wish to lower it further to 17%. They say that would encourage more businesses to the UK. That’s an important detail as the country is in the midst of a tricky Brexit negotiation period where it could lose much of its pulling power as a gateway to Europe.
Other details have affected the tax calculation, including a higher level of share-based payments during 2017.