7 ms·

Amazon had sales income of €44bn in Europe in 2020 but paid no corporation tax

94 points by quaker5567 5y ago

dazc 5y ago
Luxemberg and Ireland are both part of the European Union. Maybe allowing individual member states to operate as tax havens is not benefitting the Union as a whole?
- brainwad 5y ago
  Even Luxembourg and Ireland have non-zero corporate income tax rates. If Amazon is managing to not pay any corporate income tax, then it's corporate income must be 0 or negative, so the fact they have low corporate income taxes is irrelevant.
  - corty 5y ago
    The tax rate is a single easy number to point to. But there also is lax to nonexistent enforcement and a very lenient tax code to start with. There have even been cases where member states refused to collect taxes that were due, where European courts tried to force the states to collect (Apple in Ireland is a famous example).
    - Supernaut 5y ago
      That's not what happened. The European Commissioner for Competition decreed that Apple had received illegal tax benefits from Ireland and ordered Apple to pay a fine of €13 billion. This was appealed to the European General Court, which ruled in favour of Apple and struck down the Commissioner's decision as illegal.
      - dogma1138 5y ago
        No that’s not what happens either. Apple wasn’t sued or fined and didn’t go to court, the ruling compelled Ireland to collect additional tax from Apple and Ireland was the one who went on and spent tax payer money on appealing the decision in the EGC.
  - hocuspocus 5y ago
    Their nominal tax rates is not the issue. Allowing entire profits realized in EU to leave to the Bahamas through layers of companies incorporated in Luxembourg/Ireland/Netherlands is.
    - brainwad 5y ago
      Is there some reason why wholly owned subsidiaries should pay income tax at all in other countries? I own assets in the US, but I don't pay income tax there, because I live in another country, where I pay income tax on my worldwide income. Amazon "lives" in the US (headquarters are in Seattle, WA), so why would it pay income tax in other countries? Its wholly owned subsidiaries are just parts of the whole, and should be taxed as such.
- corty 5y ago
  It isn't. But the tax havens, mostly Malta, Luxemburg, the Netherlands and Ireland block everything that limits their shenanigans. Unfortunately the EU is ruled (depending on the topic) by a double-majority of 60% of population and states or unanimously. The latter is usually used in financial topics. So this will never change.
  - luch 5y ago
    Don't be so sure it will never change. Until last year the EU had zero involvement in healthcare and public safety, that was every nation's own private garden.
durnygbur 5y ago
Don't worry, it'll trickle down. They're waiting to pay back to society just anytime.
dsnr 5y ago
This particular situation has nothing to do with tax havens. Amazon is employing tax avoidance practices such as building up losses in Luxembourg to prevent paying corporate tax. You can do this in any country. I am not in favor of Biden’s proposal as it would only impact small companies or start-ups who can’t afford to employ teams of accountants only to report and pay profits in each country where they have sales. Look at the mess that the EU VAT reporting system is. It’s totally unattractive for small, honest businesses. Biden is basically proposing the same thing, only for corporate tax.
- durnygbur 5y ago
  > Look at the mess that the EU VAT reporting system is. Look at the mess that dividend and capital gains taxes are for an individual investor in EU. Look at the mess that social and retirement systems are for an individual employee in EU. Who cares? One simply has to deal with them or their life is turned into misery.
foobarthrowaway 5y ago
I... I just don't understand, all these global corporations assured me repeatedly that they believed BLM and equality and hated the nazis. I thought we were going to team up in our shared struggle and fight the bourgeoisie together.
tonyedgecombe 5y ago
Corporation tax is always going to be a race to the bottom. It would be better to accept that and abolish it. Replace it by treating dividends and capital gains as normal income for tax purposes. This would be much harder to avoid.
- dsnr 5y ago
  That would be great, but in that case governments can’t double- or triple-tax the same money. Governments are used to tax the same income multiple times and then complain when someone does shady stuff to avoid paying. For example: Sale -> VAT -> Corporate Tax -> Employment and social security taxes -> Dividend and capital gains tax
  - orwin 5y ago
    I think you have to follow Hanlon's razor for governement policies. It used to be easier to calculate and recover VAT and corporate tax. Also, it is weird that tax in english is used to describe VAT as well as employment/SS "tax", this is not the same thing (or at least it shouldn't be).
- orwin 5y ago
  Global tax on inheritance and tax on capital, no VAT, income or corporate tax, and i'd be happy. Some corporate tax, easely negated by going in debt, is necessary though.
- throw1742 5y ago
  I think it's an interesting idea and I believe Estonia is doing exactly that. https://en.m.wikipedia.org/wiki/Taxation_in_Estonia https://en.m.wikipedia.org/wiki/Taxation_in_Estonia > However, the system of corporate earnings taxation currently in force in Estonia is a unique system, which shifts the moment of corporate taxation from the moment of earning the profits to the moment of their distribution. In other words, earning profits in itself does not bring income tax liability, which arises only when earned profit is distributed to shareholders.
Borlands 5y ago
“The Luxembourg unit (...) employs just 5,262 staff meaning that the income per employ amounts to €8.4m“ This puts things into perspective/scale.
- brainwad 5y ago
  Except that it's wrong: _revenue_ may be €8.4m per employee, but that's not the same thing as income. In a low-margin retail business like Amazon's, of course the revenues will be high, but almost all of that is compensated for by costs of revenue.
  - wishysgb 5y ago
    amazon isn't only retail. It is a logistics company. A data center company. An insurance company....
    - Ygg2 5y ago
      A Company "Making" Everything? Or ACME for short?
  - cdash 5y ago
    Frankly, this is bullshit. If Amazon's business was such low margin, then how have they been able to have so much growth? The only answer, is that it isn't actually as low margin as commonly stated and instead we have a tax system with loopholes that allow businesses to make a "profit" but by "reinvesting" in themselves they don't have to pay any taxes.
    - brainwad 5y ago
      Because they cross-subsidise their unprofitable new markets with their profitable established markets, so overall the company makes (historically) a net loss. It's been a great strategy for Amazon and it is what the tax system is meant to incentivise - economic development instead of extraction.
- IkmoIkmo 5y ago
gryzzly 5y ago
And yet not much consumer boycotts are happening, hard for me to understand that. In Germany, it’s really easy to not use Amazon – prices aren’t exclusively low on Amazon and because you have 14 days return rules and the deliveries done via the same delivery companies (I know Amazon does some of it on its own, but it’s not any better than the rest in my experience) it’s really not more superior in the general case to any other online shop. Anyway, if you are in Germany, use idealo.de or similar price comparison websites to compare the prices for the item you want and try to avoid Amazon if you can. Fuck Amazon and other schemers avoiding real taxation. It’s nasty. They use public services for their infrastructure, they benefit of the consumer society in the EU, they should pay taxes, really simple.
- dsnr 5y ago
  In Germany, I would still use Amazon over the local companies that have no idea what customer support is. Until they learn to care more about customers you really have no choice. I’ve banned German retailers in my household for that reason.
  - gryzzly 5y ago
    Can you be more specific about your experiences? I live here for 10 years and never had a bad experience with an online shop that sells items per delivery. The law makes it equal for everyone – you can return the stuff, you can get stuff replaced if it’s broken and anything else. What type of bad experience you had with other online retailers?
    - mschuster91 5y ago
      > What type of bad experience you had with other online retailers? Shipping, shipping, shipping. Amazon ditches shipping providers that provide low quality, with web shops you as the customer have to pray that the shop isn't using <insert name of logistics company that has a particularly moronic local agent here>. Many German shops ship with DHL which is expensive but has somewhat consistent quality, a wide net of post offices and Packstation lockers where you can pick up stuff yourself and (at least to my knowledge) does not engage much in using shoddy contractors. Others however... are cheap for a reason and the reason is usually underpaid to outright enslaved staff, pressured so hard by ridiculous delivery quota that they count a "not at home" delivery within 5 seconds of ringing the bell and no one answering. Friends of mine lived in a new constructed area and they had a hard time of getting packages from anyone but DHL for months because the other services always returned packages with "unable to find address". DHL has the advantage that they are connected with the national post service which means the cities and counties provide them with always fresh information about construction works, whereas the competition is stuck on sometimes months old data.
brainwad 5y ago
Corporate income tax is paid on net profits, not on sales revenue (if it were otherwise, it would just ban low-margin businesses, which would be harmful to society). Amazon not owing corporate income tax isn't at all surprising. In most years that Amazon has existed, it didn't make a net profit at all, worldwide. It's still quite a low-margin business and I can easily imagine that the Europe business is still loss-making.
- varjag 5y ago
  I miss the days when unprofitable companies went bankrupt.
  - mrweasel 5y ago
    Amazon isn't unprofitable, they just reinvest everything back into developing the company. Politicians just failed to take that scenario into account when designing the tax laws. I do however agree with you. There is a ton of companies that only survive because investors keep pumping money into them. If you can't turn a profit after ten years, then maybe your company shouldn't exist.
    - nspattak 5y ago
      No they do not necassarily reinvest everything back to the company, they just funnel the money to tax heavens: https://www.youtube.com/watch?v=d4o13isDdfY https://www.youtube.com/watch?v=d4o13isDdfY
    - fyzics 5y ago
      Why is reinvesting profits a bad thing. Reinvesting 1Billion into the company is more beneficial to society than paying tax on that 1 billion. Creating thousands of new jobs is much better than however the government would spend the 200M they collect in taxes.
    - varjag 5y ago
      If it didn't make net profit as GP suggests, it's unprofitable. If it did but shuffled the money via subsidiaries to present that it didn't, it's called tax evasion indeed.
shawabawa3 5y ago
> "Amazon’s revenues have soared under the pandemic while our high streets struggle, yet it continues to shift its profits to tax havens like Luxembourg to avoid paying its fair share of tax." But it reported a 1.7B loss in Luxembourg. So where are the profits going? Reinvested in the business?
- saddlerustle 5y ago
  There are no profits. Amazon loses money in europe
  - nprateem 5y ago
    Dream on
  - Traster 5y ago
    Ok, so when are they going to stop operating in the market then? They're consistently losing money they should just shut down right?
    - Asdrubalini 5y ago
      Not necessarily, it depends on their strategy for the future.
    - brainwad 5y ago
      They need to operate AWS in Europe in order for AWS to be competetive - you can't run a cloud just in the US. It could be unprofitable indefinitely, but so long as the US business makes enough to cover the losses, it's fine. As for retail - generally their retail segments start out unprofitable but eventually turn a profit. Amazon is in it for the super-long game, they didn't make an overall profit for 20 years and Bezos is against paying dividends to investors when the money could be reinvested.
    - saddlerustle 5y ago
      No, they are making capital investments in order to make more money in the future. They still have huge opportunity to expand their operations in europe.
IkmoIkmo 5y ago
Terrible article, Amazon didn’t pay profit taxes, because Amazon didn’t make profits but instead, a loss. How is this an issue? Unless the article contains any details or hint whatsoever of undue deductions artificially depressing paper profits (it doesn’t) there’s absolutely no reason to find any issue in a company paying no profit taxes when it makes a loss. Sales get taxed with sales tax, which Amazon paid in the EU in the billions like any other company. I’m not absolving Amazon here but this article contains nothing damning.
- lotsofpulp 5y ago
  > I’m not absolving Amazon here but this article contains nothing damning. Pointing out a company that plays by the government’s rules and minimizes tax obligations is a reliable mechanism to get people emotional and result in clicks. It is funny to me, though, on a forum with otherwise “knowledgeable” or “discerning” people, that finance topics invite a considerable portion of forum members to disregard their skepticism and join in emotional manipulation of the article. As opposed to learning what the causes for low tax liability are, discussing if it’s reasonable policy, and what changes to tax law need to be made, it’s just a bunch of comments screaming “tax evasion”.
- martin-adams 5y ago
  I recall something about movie studios setting up their business so that a successful film can technically be a flop because of all the internal billing. I recall this affecting royalties to those involved in making because it supposedly made less money. Is the same thing going on here? Is Amazon unprofitable in Europe because it’s billing itself from another Amazon entity outside of Europe thus wiping out the profit?
  - IkmoIkmo 5y ago
    Well, that's what I'm wondering but the article doesn't specify at all. It's like an article's headline states: Amazon stopped paying thousands of employees it hired last year. Incendiary title, is Amazon perhaps breaking the rules? And then you click on it and read that Amazon did not renew contracts of 10% of the employees it hired last year, and is therefore not paying them anymore as they're not working for Amazon anymore. Which is normal business procedure, just like not having to pay taxes when you take a loss. And then the second question is, were the people fired illegitimately perhaps? Or did Amazon use a ta trick? Well who knows, the article doesn't mention a shred of evidence of it. That's why it's poor journalism. I'm not absolving Amazon of any faults, it's obviously a company with many faults and issues and I would not be surprised if there's any more. What I am saying is that this article doesn't present any evidence of any faults, yet insinuates them. I tend to like reading the Guardian so it's a disappointment to see a lack of nuance or information.
M_bara 5y ago
Sorry to barge in with a different angle. What do people think about the so called ‘minimum tax’? A max of (1% of gross revenue, 30% of net revenue). So even if you declare a loss you still pay 1% of revenue....
- cynix 5y ago
  Wouldn't that be unfair to businesses that _actually_ lose money?
  - notahacker 5y ago
    If you actually lose money on a per unit basis at massive scale, then either you're doing it because you've got a long term plan that's going to make much more back and access to investment, or you should stop... The trickier bit with revenue taxes is that businesses operating in ideally competitive markets naturally have very small margins over the long term anyway, so they (and their consumers) are penalised more than the oligopolies
- whitepaint 5y ago
  It would punish the businesses whose margins are low. It's unfair and would be detrimental to the economy.
- IkmoIkmo 5y ago
  There's already VAT on revenue (or added value more strictly speaking after reconciliation).
LatteLazy 5y ago
Corporation tax in the UK is misnamed. It's actually "small business tax" because you don't have to pay of you fit one of: being big, being publicly traded, being multinational. I've paid similar amounts on my little one man company as many mega corps.
rlpb 5y ago
I find it remarkable that in this sort of case the public sentiment is to hate on the corporation, rather than on the governments who set the (byzantine) tax rules that the corporation is following.
- Milner08 5y ago
  The UK at least tried to impose taxes and the US threatened us with sanctions. I am not aware of the exact details but its clear there is some will to change it but there is a lot of strong opposition to it as well.
  - saddlerustle 5y ago
    The UK tried to impose taxes on revenue on exclusively American companies, which is exactly equivalent to a tariff. Threatening tariffs in the other direction is a very reasonable response in trade disputes.
- oblio 5y ago
  Because the byzantine tax rules are set by those same corporations through lobbying (aka corruption).
  - fyzics 5y ago
    Don't hate the player. If the problem is corruption, then amazon is the wrong target if you want meaningful change.
    - oblio 5y ago
      You can hate both. And you can definitely hate the player.
      - whitepaint 5y ago
        You can hate all you want, but by just hating you won't change anything. It's truly baffling to me that people don't see very clearly that Amazon is not the problem here.
mikkom 5y ago
> despite collecting record income, the Luxembourg unit made a €1.2bn loss and therefore paid no tax. If they made a loss they pay no taxes. I'm not supporting tax avoidance but this is totally basic stuff. Most likely amazon grows and invests their profits to open new sites like Sweden and it costs money.
- deleted 5y ago
  [deleted]
- bildung 5y ago
  Yes, but it isn't clear why they didn't make profits. Ikea locations also usually don't make a profit - because they have to pay "license fees" to the mothership registered in a tax haven.
- Reason077 5y ago
  They also pay billions (almost $5 billion in FY 2020) in "royalties" back to the US parent company. So while Amazon Europe may report a loss in Europe, it certainly makes a lot of profit for Amazon Inc. (It's also helpful that foreign royalty income qualifies for a discount under US tax rules!)
- cigaser 5y ago
  Many people made loss last year and still have to pay. Argument is essentially "I should not pay any taxes, because I spend all my income on house renovation".
  - lotsofpulp 5y ago
    The argument is the law allows for deducting of business expenses. The law does not allow for deducting of house renovation expenses for personal taxes.
nspattak 5y ago
I am really amazed by the comments saying "they did not make profits so it is reasonable they do not pay any taxes". You are skipping the whole point which is that a company that made 44bn sales income didn't really make 0 or negative profits, they are simply tax evading. I also think that this is very useful: https://www.youtube.com/watch?v=d4o13isDdfY https://www.youtube.com/watch?v=d4o13isDdfY
- TheSpiceIsLife 5y ago
  Tax evasion is illegal. If you get caught you'll usually be fined and have to pay the tax. Tax avoidance is what Amazon does, and so should everyone else. Having said that, I tend to agree with the thrust of your comment, that being: we should close, probably, close these avoidance avenues the for the ultra-wealthy. It's probably an intractable problem though, because the ultra-wealthy make the rules.
  - Traster 5y ago
    I think the difference between Tax evasion and tax avoidance becomes moot when the corporation you're talking about spends huge amounts of money on shaping tax policy.
  - fileeditview 5y ago
    > Tax avoidance is what Amazon does, and so should everyone else. I am interested to hear why everyone should avoid taxes, that pay for the infrastructure and wealth of the general public. I am really not advocating insane tax rates but you would think that persons or companies that profit extensively from the wealth of certain nations are willing to do their part in maintaining said wealth. What about usage of our streets? Thousands of Amazon delivery trucks roll over them every day. They are not paid for by tax avoidance. Besides all that I agree that especially the governments have to do a better job to avoid tax avoiders. A conscious customer is a nice thing but is too idealistic to solve anything and will never reach critical mass.
    - TheSpiceIsLife 5y ago
natn 5y ago
This story comes back again and again. And it makes no sense, because businesses pay tax on profits, not revenue! It sounds outrageous that a big company does so much business and doesn't end up paying lots of taxes, maybe it's suspicious, but it's only a necessarily problem if you make some flawed assumptions about how the business works. There are different theories about the social value of enterprise, but in general businesses are meant to reinvest revenue into developing the business, and only taxed on what is taken as profit, such as to be payed to shareholders. That this incentivizes direct reinvestment is a feature, not a bug. It's just that amazon takes this to an extreme in prioritizing reinvestment over profit. Does Amazon also structure its operations to optimize its tax posture? Of course, they're obliged to as a publicly traded company. Overall is this an optimal/fair situation? Probably not. But the problem is really an inevitable outcome of the way that tax laws are setup. Amazon's only major moral failing here is simply in being a large multinational, with an expansionist business model.
- asplake 5y ago
  In ways that smaller companies don’t, large organisations have choice about where they pay taxes, and that’s highly unfair both to companies and to countries. Hard not to see this leading in the long run to taxation on turnover.
- username90 5y ago
  Amazon did pay taxes in USA during that period though. They just shuffled around all their profits such that no taxes were paid in Europe.
- desertedisland 5y ago
  The story is that - certainly in the early days - you could be fired from Amazon as a manager if your section made a profit. The argument is that your entire focus as a software / service business is growth (aimed at profitability for some undetermined future date). If your section or company is making a profit this represents a failure to utilise all of your resources for the purpose of growth. As a multi-national there are various tax shenanigans you can play - that is up to governments to decide how to crack down on those. The unfortunate fact is that you need countries like Ireland on board who have benefited greatly from being very corporation tax friendly.
hagy 5y ago
They only made $717 million in 2020 across all international markets. From the most recent 10-K, https://ir.aboutamazon.com/sec-filings/sec-filings-details/default.aspx?FilingId=14665784 https://ir.aboutamazon.com/sec-filings/sec-filings-details/d... Category Net sales Operating expenses Operating income Margin North America 236.3 227.6 8.7 3.7% International 104.4 103.7 0.7 0.7% AWS 45.4 31.8 13.5 29.7% Dollar amounts in billions. I added profit margins to show just how little profit they're making in the retail business, particularly in the international market. AWS is the profit machine. I couldn't find a further breakdown of different markets in their 10-K. That might be because its difficult to assign expenses to the market for a single country.

94 points by quaker5567 5y ago

dazc 5y ago

Luxemberg and Ireland are both part of the European Union. Maybe allowing individual member states to operate as tax havens is not benefitting the Union as a whole?

brainwad 5y ago
Even Luxembourg and Ireland have non-zero corporate income tax rates. If Amazon is managing to not pay any corporate income tax, then it's corporate income must be 0 or negative, so the fact they have low corporate income taxes is irrelevant.
- corty 5y ago
  The tax rate is a single easy number to point to. But there also is lax to nonexistent enforcement and a very lenient tax code to start with. There have even been cases where member states refused to collect taxes that were due, where European courts tried to force the states to collect (Apple in Ireland is a famous example).
  - Supernaut 5y ago
    That's not what happened. The European Commissioner for Competition decreed that Apple had received illegal tax benefits from Ireland and ordered Apple to pay a fine of €13 billion. This was appealed to the European General Court, which ruled in favour of Apple and struck down the Commissioner's decision as illegal.
    - dogma1138 5y ago
      No that’s not what happens either. Apple wasn’t sued or fined and didn’t go to court, the ruling compelled Ireland to collect additional tax from Apple and Ireland was the one who went on and spent tax payer money on appealing the decision in the EGC.
- hocuspocus 5y ago
  Their nominal tax rates is not the issue. Allowing entire profits realized in EU to leave to the Bahamas through layers of companies incorporated in Luxembourg/Ireland/Netherlands is.
  - brainwad 5y ago
    Is there some reason why wholly owned subsidiaries should pay income tax at all in other countries? I own assets in the US, but I don't pay income tax there, because I live in another country, where I pay income tax on my worldwide income. Amazon "lives" in the US (headquarters are in Seattle, WA), so why would it pay income tax in other countries? Its wholly owned subsidiaries are just parts of the whole, and should be taxed as such.
corty 5y ago
It isn't. But the tax havens, mostly Malta, Luxemburg, the Netherlands and Ireland block everything that limits their shenanigans. Unfortunately the EU is ruled (depending on the topic) by a double-majority of 60% of population and states or unanimously. The latter is usually used in financial topics. So this will never change.
- luch 5y ago
  Don't be so sure it will never change. Until last year the EU had zero involvement in healthcare and public safety, that was every nation's own private garden.

durnygbur 5y ago

Don't worry, it'll trickle down. They're waiting to pay back to society just anytime.

dsnr 5y ago

This particular situation has nothing to do with tax havens. Amazon is employing tax avoidance practices such as building up losses in Luxembourg to prevent paying corporate tax. You can do this in any country. I am not in favor of Biden’s proposal as it would only impact small companies or start-ups who can’t afford to employ teams of accountants only to report and pay profits in each country where they have sales. Look at the mess that the EU VAT reporting system is. It’s totally unattractive for small, honest businesses. Biden is basically proposing the same thing, only for corporate tax.

durnygbur 5y ago
> Look at the mess that the EU VAT reporting system is. Look at the mess that dividend and capital gains taxes are for an individual investor in EU. Look at the mess that social and retirement systems are for an individual employee in EU. Who cares? One simply has to deal with them or their life is turned into misery.

foobarthrowaway 5y ago

I... I just don't understand, all these global corporations assured me repeatedly that they believed BLM and equality and hated the nazis. I thought we were going to team up in our shared struggle and fight the bourgeoisie together.

tonyedgecombe 5y ago

Corporation tax is always going to be a race to the bottom. It would be better to accept that and abolish it. Replace it by treating dividends and capital gains as normal income for tax purposes. This would be much harder to avoid.

dsnr 5y ago
That would be great, but in that case governments can’t double- or triple-tax the same money. Governments are used to tax the same income multiple times and then complain when someone does shady stuff to avoid paying. For example: Sale -> VAT -> Corporate Tax -> Employment and social security taxes -> Dividend and capital gains tax
- orwin 5y ago
  I think you have to follow Hanlon's razor for governement policies. It used to be easier to calculate and recover VAT and corporate tax. Also, it is weird that tax in english is used to describe VAT as well as employment/SS "tax", this is not the same thing (or at least it shouldn't be).
orwin 5y ago
Global tax on inheritance and tax on capital, no VAT, income or corporate tax, and i'd be happy. Some corporate tax, easely negated by going in debt, is necessary though.
throw1742 5y ago
I think it's an interesting idea and I believe Estonia is doing exactly that. https://en.m.wikipedia.org/wiki/Taxation_in_Estonia https://en.m.wikipedia.org/wiki/Taxation_in_Estonia > However, the system of corporate earnings taxation currently in force in Estonia is a unique system, which shifts the moment of corporate taxation from the moment of earning the profits to the moment of their distribution. In other words, earning profits in itself does not bring income tax liability, which arises only when earned profit is distributed to shareholders.

Borlands 5y ago

“The Luxembourg unit (...) employs just 5,262 staff meaning that the income per employ amounts to €8.4m“ This puts things into perspective/scale.

brainwad 5y ago
Except that it's wrong: _revenue_ may be €8.4m per employee, but that's not the same thing as income. In a low-margin retail business like Amazon's, of course the revenues will be high, but almost all of that is compensated for by costs of revenue.
- wishysgb 5y ago
  amazon isn't only retail. It is a logistics company. A data center company. An insurance company....
  - Ygg2 5y ago
    A Company "Making" Everything? Or ACME for short?
- cdash 5y ago
  Frankly, this is bullshit. If Amazon's business was such low margin, then how have they been able to have so much growth? The only answer, is that it isn't actually as low margin as commonly stated and instead we have a tax system with loopholes that allow businesses to make a "profit" but by "reinvesting" in themselves they don't have to pay any taxes.
  - brainwad 5y ago
    Because they cross-subsidise their unprofitable new markets with their profitable established markets, so overall the company makes (historically) a net loss. It's been a great strategy for Amazon and it is what the tax system is meant to incentivise - economic development instead of extraction.
IkmoIkmo 5y ago

gryzzly 5y ago

And yet not much consumer boycotts are happening, hard for me to understand that. In Germany, it’s really easy to not use Amazon – prices aren’t exclusively low on Amazon and because you have 14 days return rules and the deliveries done via the same delivery companies (I know Amazon does some of it on its own, but it’s not any better than the rest in my experience) it’s really not more superior in the general case to any other online shop. Anyway, if you are in Germany, use idealo.de or similar price comparison websites to compare the prices for the item you want and try to avoid Amazon if you can. Fuck Amazon and other schemers avoiding real taxation. It’s nasty. They use public services for their infrastructure, they benefit of the consumer society in the EU, they should pay taxes, really simple.

dsnr 5y ago
In Germany, I would still use Amazon over the local companies that have no idea what customer support is. Until they learn to care more about customers you really have no choice. I’ve banned German retailers in my household for that reason.
- gryzzly 5y ago
  Can you be more specific about your experiences? I live here for 10 years and never had a bad experience with an online shop that sells items per delivery. The law makes it equal for everyone – you can return the stuff, you can get stuff replaced if it’s broken and anything else. What type of bad experience you had with other online retailers?
  - mschuster91 5y ago
    > What type of bad experience you had with other online retailers? Shipping, shipping, shipping. Amazon ditches shipping providers that provide low quality, with web shops you as the customer have to pray that the shop isn't using <insert name of logistics company that has a particularly moronic local agent here>. Many German shops ship with DHL which is expensive but has somewhat consistent quality, a wide net of post offices and Packstation lockers where you can pick up stuff yourself and (at least to my knowledge) does not engage much in using shoddy contractors. Others however... are cheap for a reason and the reason is usually underpaid to outright enslaved staff, pressured so hard by ridiculous delivery quota that they count a "not at home" delivery within 5 seconds of ringing the bell and no one answering. Friends of mine lived in a new constructed area and they had a hard time of getting packages from anyone but DHL for months because the other services always returned packages with "unable to find address". DHL has the advantage that they are connected with the national post service which means the cities and counties provide them with always fresh information about construction works, whereas the competition is stuck on sometimes months old data.

brainwad 5y ago

Corporate income tax is paid on net profits, not on sales revenue (if it were otherwise, it would just ban low-margin businesses, which would be harmful to society). Amazon not owing corporate income tax isn't at all surprising. In most years that Amazon has existed, it didn't make a net profit at all, worldwide. It's still quite a low-margin business and I can easily imagine that the Europe business is still loss-making.

varjag 5y ago
I miss the days when unprofitable companies went bankrupt.
- mrweasel 5y ago
  Amazon isn't unprofitable, they just reinvest everything back into developing the company. Politicians just failed to take that scenario into account when designing the tax laws. I do however agree with you. There is a ton of companies that only survive because investors keep pumping money into them. If you can't turn a profit after ten years, then maybe your company shouldn't exist.
  - nspattak 5y ago
    No they do not necassarily reinvest everything back to the company, they just funnel the money to tax heavens: https://www.youtube.com/watch?v=d4o13isDdfY https://www.youtube.com/watch?v=d4o13isDdfY
  - fyzics 5y ago
    Why is reinvesting profits a bad thing. Reinvesting 1Billion into the company is more beneficial to society than paying tax on that 1 billion. Creating thousands of new jobs is much better than however the government would spend the 200M they collect in taxes.
  - varjag 5y ago
    If it didn't make net profit as GP suggests, it's unprofitable. If it did but shuffled the money via subsidiaries to present that it didn't, it's called tax evasion indeed.

shawabawa3 5y ago

> "Amazon’s revenues have soared under the pandemic while our high streets struggle, yet it continues to shift its profits to tax havens like Luxembourg to avoid paying its fair share of tax." But it reported a 1.7B loss in Luxembourg. So where are the profits going? Reinvested in the business?

saddlerustle 5y ago
There are no profits. Amazon loses money in europe
- nprateem 5y ago
  Dream on
- Traster 5y ago
  Ok, so when are they going to stop operating in the market then? They're consistently losing money they should just shut down right?
  - Asdrubalini 5y ago
    Not necessarily, it depends on their strategy for the future.
  - brainwad 5y ago
    They need to operate AWS in Europe in order for AWS to be competetive - you can't run a cloud just in the US. It could be unprofitable indefinitely, but so long as the US business makes enough to cover the losses, it's fine. As for retail - generally their retail segments start out unprofitable but eventually turn a profit. Amazon is in it for the super-long game, they didn't make an overall profit for 20 years and Bezos is against paying dividends to investors when the money could be reinvested.
  - saddlerustle 5y ago
    No, they are making capital investments in order to make more money in the future. They still have huge opportunity to expand their operations in europe.

IkmoIkmo 5y ago

Terrible article, Amazon didn’t pay profit taxes, because Amazon didn’t make profits but instead, a loss. How is this an issue? Unless the article contains any details or hint whatsoever of undue deductions artificially depressing paper profits (it doesn’t) there’s absolutely no reason to find any issue in a company paying no profit taxes when it makes a loss. Sales get taxed with sales tax, which Amazon paid in the EU in the billions like any other company. I’m not absolving Amazon here but this article contains nothing damning.

lotsofpulp 5y ago
> I’m not absolving Amazon here but this article contains nothing damning. Pointing out a company that plays by the government’s rules and minimizes tax obligations is a reliable mechanism to get people emotional and result in clicks. It is funny to me, though, on a forum with otherwise “knowledgeable” or “discerning” people, that finance topics invite a considerable portion of forum members to disregard their skepticism and join in emotional manipulation of the article. As opposed to learning what the causes for low tax liability are, discussing if it’s reasonable policy, and what changes to tax law need to be made, it’s just a bunch of comments screaming “tax evasion”.
martin-adams 5y ago
I recall something about movie studios setting up their business so that a successful film can technically be a flop because of all the internal billing. I recall this affecting royalties to those involved in making because it supposedly made less money. Is the same thing going on here? Is Amazon unprofitable in Europe because it’s billing itself from another Amazon entity outside of Europe thus wiping out the profit?
- IkmoIkmo 5y ago
  Well, that's what I'm wondering but the article doesn't specify at all. It's like an article's headline states: Amazon stopped paying thousands of employees it hired last year. Incendiary title, is Amazon perhaps breaking the rules? And then you click on it and read that Amazon did not renew contracts of 10% of the employees it hired last year, and is therefore not paying them anymore as they're not working for Amazon anymore. Which is normal business procedure, just like not having to pay taxes when you take a loss. And then the second question is, were the people fired illegitimately perhaps? Or did Amazon use a ta trick? Well who knows, the article doesn't mention a shred of evidence of it. That's why it's poor journalism. I'm not absolving Amazon of any faults, it's obviously a company with many faults and issues and I would not be surprised if there's any more. What I am saying is that this article doesn't present any evidence of any faults, yet insinuates them. I tend to like reading the Guardian so it's a disappointment to see a lack of nuance or information.

M_bara 5y ago

Sorry to barge in with a different angle. What do people think about the so called ‘minimum tax’? A max of (1% of gross revenue, 30% of net revenue). So even if you declare a loss you still pay 1% of revenue....

cynix 5y ago
Wouldn't that be unfair to businesses that _actually_ lose money?
- notahacker 5y ago
  If you actually lose money on a per unit basis at massive scale, then either you're doing it because you've got a long term plan that's going to make much more back and access to investment, or you should stop... The trickier bit with revenue taxes is that businesses operating in ideally competitive markets naturally have very small margins over the long term anyway, so they (and their consumers) are penalised more than the oligopolies
whitepaint 5y ago
It would punish the businesses whose margins are low. It's unfair and would be detrimental to the economy.
IkmoIkmo 5y ago
There's already VAT on revenue (or added value more strictly speaking after reconciliation).

LatteLazy 5y ago

Corporation tax in the UK is misnamed. It's actually "small business tax" because you don't have to pay of you fit one of: being big, being publicly traded, being multinational. I've paid similar amounts on my little one man company as many mega corps.

rlpb 5y ago

I find it remarkable that in this sort of case the public sentiment is to hate on the corporation, rather than on the governments who set the (byzantine) tax rules that the corporation is following.

Milner08 5y ago
The UK at least tried to impose taxes and the US threatened us with sanctions. I am not aware of the exact details but its clear there is some will to change it but there is a lot of strong opposition to it as well.
- saddlerustle 5y ago
  The UK tried to impose taxes on revenue on exclusively American companies, which is exactly equivalent to a tariff. Threatening tariffs in the other direction is a very reasonable response in trade disputes.
oblio 5y ago
Because the byzantine tax rules are set by those same corporations through lobbying (aka corruption).
- fyzics 5y ago
  Don't hate the player. If the problem is corruption, then amazon is the wrong target if you want meaningful change.
  - oblio 5y ago
    You can hate both. And you can definitely hate the player.
    - whitepaint 5y ago
      You can hate all you want, but by just hating you won't change anything. It's truly baffling to me that people don't see very clearly that Amazon is not the problem here.

mikkom 5y ago

> despite collecting record income, the Luxembourg unit made a €1.2bn loss and therefore paid no tax. If they made a loss they pay no taxes. I'm not supporting tax avoidance but this is totally basic stuff. Most likely amazon grows and invests their profits to open new sites like Sweden and it costs money.

deleted 5y ago
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bildung 5y ago
Yes, but it isn't clear why they didn't make profits. Ikea locations also usually don't make a profit - because they have to pay "license fees" to the mothership registered in a tax haven.
Reason077 5y ago
They also pay billions (almost $5 billion in FY 2020) in "royalties" back to the US parent company. So while Amazon Europe may report a loss in Europe, it certainly makes a lot of profit for Amazon Inc. (It's also helpful that foreign royalty income qualifies for a discount under US tax rules!)
cigaser 5y ago
Many people made loss last year and still have to pay. Argument is essentially "I should not pay any taxes, because I spend all my income on house renovation".
- lotsofpulp 5y ago
  The argument is the law allows for deducting of business expenses. The law does not allow for deducting of house renovation expenses for personal taxes.

nspattak 5y ago

I am really amazed by the comments saying "they did not make profits so it is reasonable they do not pay any taxes". You are skipping the whole point which is that a company that made 44bn sales income didn't really make 0 or negative profits, they are simply tax evading. I also think that this is very useful: https://www.youtube.com/watch?v=d4o13isDdfY https://www.youtube.com/watch?v=d4o13isDdfY

TheSpiceIsLife 5y ago
Tax evasion is illegal. If you get caught you'll usually be fined and have to pay the tax. Tax avoidance is what Amazon does, and so should everyone else. Having said that, I tend to agree with the thrust of your comment, that being: we should close, probably, close these avoidance avenues the for the ultra-wealthy. It's probably an intractable problem though, because the ultra-wealthy make the rules.
- Traster 5y ago
  I think the difference between Tax evasion and tax avoidance becomes moot when the corporation you're talking about spends huge amounts of money on shaping tax policy.
- fileeditview 5y ago
  > Tax avoidance is what Amazon does, and so should everyone else. I am interested to hear why everyone should avoid taxes, that pay for the infrastructure and wealth of the general public. I am really not advocating insane tax rates but you would think that persons or companies that profit extensively from the wealth of certain nations are willing to do their part in maintaining said wealth. What about usage of our streets? Thousands of Amazon delivery trucks roll over them every day. They are not paid for by tax avoidance. Besides all that I agree that especially the governments have to do a better job to avoid tax avoiders. A conscious customer is a nice thing but is too idealistic to solve anything and will never reach critical mass.
  - TheSpiceIsLife 5y ago

natn 5y ago

This story comes back again and again. And it makes no sense, because businesses pay tax on profits, not revenue! It sounds outrageous that a big company does so much business and doesn't end up paying lots of taxes, maybe it's suspicious, but it's only a necessarily problem if you make some flawed assumptions about how the business works. There are different theories about the social value of enterprise, but in general businesses are meant to reinvest revenue into developing the business, and only taxed on what is taken as profit, such as to be payed to shareholders. That this incentivizes direct reinvestment is a feature, not a bug. It's just that amazon takes this to an extreme in prioritizing reinvestment over profit. Does Amazon also structure its operations to optimize its tax posture? Of course, they're obliged to as a publicly traded company. Overall is this an optimal/fair situation? Probably not. But the problem is really an inevitable outcome of the way that tax laws are setup. Amazon's only major moral failing here is simply in being a large multinational, with an expansionist business model.

asplake 5y ago
In ways that smaller companies don’t, large organisations have choice about where they pay taxes, and that’s highly unfair both to companies and to countries. Hard not to see this leading in the long run to taxation on turnover.
username90 5y ago
Amazon did pay taxes in USA during that period though. They just shuffled around all their profits such that no taxes were paid in Europe.
desertedisland 5y ago
The story is that - certainly in the early days - you could be fired from Amazon as a manager if your section made a profit. The argument is that your entire focus as a software / service business is growth (aimed at profitability for some undetermined future date). If your section or company is making a profit this represents a failure to utilise all of your resources for the purpose of growth. As a multi-national there are various tax shenanigans you can play - that is up to governments to decide how to crack down on those. The unfortunate fact is that you need countries like Ireland on board who have benefited greatly from being very corporation tax friendly.

hagy 5y ago

They only made $717 million in 2020 across all international markets. From the most recent 10-K, https://ir.aboutamazon.com/sec-filings/sec-filings-details/default.aspx?FilingId=14665784 https://ir.aboutamazon.com/sec-filings/sec-filings-details/d... Category Net sales Operating expenses Operating income Margin North America 236.3 227.6 8.7 3.7% International 104.4 103.7 0.7 0.7% AWS 45.4 31.8 13.5 29.7% Dollar amounts in billions. I added profit margins to show just how little profit they're making in the retail business, particularly in the international market. AWS is the profit machine. I couldn't find a further breakdown of different markets in their 10-K. That might be because its difficult to assign expenses to the market for a single country.