Economic justice advocates expressed outrage and called for a crackdown on tax evasion on Tuesday after Amazon's latest filings in Luxembourg revealed that the online giant paid $0 in corporate taxes to European countries last year despite reporting record-high sales of nearly $53 billion amid the Covid-19 pandemic.
"Amazon's revenues have soared under the pandemic while our high streets struggle," said Margaret Hodge, a parliamentarian from the British Labour Party and long-time critic of tax dodging. "It seems that Amazon's relentless campaign of appalling tax avoidance continues."
The Guardian reported that accounts for Amazon EU Sarl, a Luxembourg-based entity that sells products to hundreds of millions of households throughout Europe and the United Kingdom, showed that the company's sales income rose from $38.5 billion in 2019 to $52.9 billion in 2020. And yet, even after a $14.4 billion increase in revenue, Amazon's so-called Luxembourg unit claimed $1.4 billion in losses and therefore paid $0 in corporate taxes.
As a matter of fact, the Luxembourg unit—which manages sales in the U.K., France, Germany, Italy, the Netherlands, Poland, Spain, and Sweden—received $67.3 million in tax credits "it can use to offset any future tax bills should it turn a profit," The Guardian noted, adding that Amazon has $3.2 billion "worth of carried forward losses stored up, which can be used against any tax payable on future profits."
"These figures are mind-blowing, even for Amazon," said Paul Monaghan, chief executive of the Fair Tax Foundation. "We are seeing exponentially accelerated market domination across the globe on the back of income that continues to be largely untaxed—allowing it to unfairly undercut local businesses that take a more responsible approach."
"The bulk of Amazon's U.K. income is booked offshore, in the enormously loss-making Luxembourg subsidiary, which means that not only are they not making a meaningful tax contribution now, but are unlikely to do so for years to come given the enormous carried forward losses they have now built up there," Monaghan added.
The Amazon EU Sarl accounts filed in Luxembourg in 2020 "do not break down how much money Amazon made from sales in each European country," The Guardian reported, but "Amazon's U.S. accounts show that its U.K. income soared by 51% last year to a record $26.5 billion."
While Amazon celebrated the growth in revenue collected from home-bound U.K. customers in 2020, the company did not divulge the total amount of taxes it paid in the country. In 2019, however, when Amazon brought in $17.5 billion in U.K. sales, the company paid just $352 million in taxes.
Last week, Amazon—whose founder and outgoing chief executive Jeff Bezos has amassed a personal fortune of approximately $200 billion—reported its largest ever quarterly profit of $1.8 billion on global sales of $109 billion.
A company spokesperson said Tuesday that "Amazon pays all the taxes required in every country where we operate."
"Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low margin business," said the spokesperson, who claimed that Amazon has "invested well over" $93.7 billion in Europe since 2010.
Hodge, however, said that Amazon "continues to shift its profits to tax havens like Luxembourg to avoid paying its fair share of tax."
Many of the world's biggest corporations have established headquarters in Luxembourg, home to just over 600,000 people and a major player in the offshore financial industry.
"Amazon is not alone in creating complex corporate structures to avoid tax," The Guardian noted. "The big six U.S. tech firms—Amazon, Facebook, Google, Netflix, Apple, and Microsoft—have been accused of avoiding $100 billion of global tax over the past decade, according to a report by the campaign group the Fair Tax Foundation. All have said that they pay the correct amounts of tax."
According to the Fair Tax Foundation, Amazon paid only $3.4 billion in income taxes last decade despite worldwide revenues of $961 billion and profits of $26.8 billion—meaning the company's effective tax rate was 12.7% during a period when, for the most part, the corporate tax rate in the U.S. had been 35%.
As Hodge noted, "These big digital companies all rely on our public services, our infrastructure, and our educated and healthy workforce. But unlike smaller businesses and hard-working taxpayers, the tech giants fail to pay fairly into the common pot for the common good."
For years, the U.S. resisted the "global treaties that reformers argued were needed to ensure that powerful multinational companies pay their fair share of taxes," The Guardian reported. But last month, the Biden administration proposed far-reaching tax reforms, including a global minimum tax aimed at preventing multinational corporations from shifting profits offshore to slash their bills.
Under U.S. President Joe Biden's proposal, "large technology companies and corporations would be forced to pay taxes to national governments based on the sales they generate in each country, irrespective of where they are based," The Guardian noted. "A global tax floor would also be agreed. The U.S. has suggested a rate of 21%, although this is higher than in several jurisdictions—including Ireland, Hungary, and the Caribbean—and could be a stumbling block."
While Germany and France have already backed the plan, other countries, including the U.K., have yet to do so.
"President Biden has proposed a new, fairer system for taxing large corporations and digital companies," said Hodge, "but the U.K. has not come out in support of the reforms."
"The silence is deafening," she added. "The government must act and help to grasp this once-in-a-generation opportunity to banish corporate tax avoidance to a thing of the past."