UK gov mulls 'Amazon tax' to help pandemic recovery

Amazon and other online retailers could be forced to pay additional tax after cashing in on the coronavirus crisis

Amazon logo on the facade of one of their corporate office buildings located in Silicon Valley

Major online retailers such as Amazon could be forced to pay additional tax in order to help the UK recover from the financial strain of the COVID pandemic.

According to the Sunday Times, HM Treasury officials invited tech firms and retailers to discuss the potential Online Sales Tax.

The summon comes days after it was revealed that Amazon’s profits skyrocketed by 51% to almost £20 billion in 2020. Despite its massive success, fueled partly by brick and mortar stores shutting their doors due to lockdown restrictions, Sky reports that the online retailer had a tax turnover ratio of 0.37%.

In response, an Amazon spokesperson told IT Pro that the company had “invested more than £23 billion in jobs and infrastructure in the UK since 2010”. 

“Last year we created 10,000 new jobs and last week we announced 1,000 new apprenticeships. This continued investment helped contribute to a total tax contribution of £1.1 billion during 2019 – £293 million in direct taxes and £854 million in indirect taxes,” the spokesperson added.

The proposed Online Sales Tax is part of the Treasury’s Fundamental Review of Business Rates, with a Call for Evidence first published in July 2020.

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Although there are fears that the tax could disproportionately affect online businesses that have not performed as well as Amazon, the Treasury told IT Pro that “the precise scope and impact of such a tax will require careful consideration”.

“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an Online Sales Tax. We’re considering responses now and will update in due course,” said a spokesperson for the Treasury.

“We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings,” they added.

The Treasury also said that the government is considering options for further COVID-related support through business rates reliefs, having allocated £830 million to 72 towns in England through the Future High Streets Fund in December of last year.

The news of the Online Sales Tax comes months after it was revealed that Amazon will not be affected by the incoming Digital Services Tax while smaller traders that use its online marketplace will face increased charges.

The UK's chancellor, Rishi Sunak, signed a letter in June 2020, alongside counterparts from France, Spain and Italy, declaring that tech giants such as Amazon and Google needed to 'pay their fair share of tax'.

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