Amazon will pay tax in the UK

cashOnline bookseller Amazon has shocked the American corporate world by agreeing to pay tax and not operate elaborate but “perfectly legal” avoidance schemes.

Amazon has become the first technology company to abandon controversial corporate structures that divert sales and profits away from the  UK in the face of a clampdown imposed by George Osborne.

The online retailer has started booking its sales through the UK, meaning resulting profits will be taxed. The group made $8.3 billion of worldwide sales from British online shoppers but for 11 years all these internet transactions have been booked in Luxembourg.

A spokesman said Amazon was “now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg”.

The move is an indication that chancellor George Osborne’s new diverted profits tax, which came into law from April. It imposes a punitive 25 percent tax on groups deemed to be artificially routing profits overseas appears to have worked.

Amazon had for years denied that its UK corporate structures were artificial or tax-motivated.

“While we offer some of the lowest business taxes in the world, we expect those taxes to be paid,” he said.

A number of other countries are considering copying Osborne’s diverted profits tax particularly if others follow suit such as Google, which routes its sales through Ireland.

Amazon and Google come out worse from two scraps with the UK parliament’s public accounts committee over these arrangements.

Committee chair Margaret Hodge told Matt Brittin, Google’s northern Europe boss, that his company’s behaviour on tax was “devious, calculated and, in my view, unethical”.