Amazon Again

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The Daily Telegraph on 21st May had some cogent comment on the Amazon lack of taxes paid in the U.K . debate.

The article begins:

The criticism, of Google, Amazon and even Marks & Spencer for seemingly trying to lower their corporation tax payments threatens to take the focus away from the real tax issue in retail – business rates.

For all the focus on how little Amazon pays in corporation tax, it is how little they pay in business rates that is really hurting the high street Their business rate bill is negligible while Home Retail Group, the owner of high street rival Argos, pays £140m.

There is no complex tax avoidance scheme by Amazon to avoid paying business rates, their low payment is simply because they have little physical presence as a business compared to the 700 high street stores of Argos.

Therefore, if the Government is serious about making online companies pay taxes and also about saving the high street it must focus on revamping business rates.

One of the reasons Amazon appears to pay little corporation tax is that its profit margins are wafer thin, reflecting the fact that online retailing is not yet as. profitable as high-street retailing. In 2012, for example, the company posted a global operating profit of $676m (£444m) on sales of $61.lbn; That is a profit margin of just 1.1 p.c.

However, business rates have no relation to profitability – they are simply measured by the rentable value of a commercial property and inflation. This means that struggling high street’ retailers have been spending millions on business rates while start-up online retailers have been free of the tax. This imbalance threatens to distort the future of the retail industry.

The full article is enclosed as a PDF Freeze on Business Rates (since the on line version has been truncated).

 

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