ONLINE RETAIL GIANT Amazon was grilled in the House of Commons today for allegedly not paying enough tax in the UK.
In October, allegations emerged that online bookseller Amazon was gaming the UK tax system, charging publishers 20 percent VAT on digital books while handing over only three percent tax.
Today the company faced a grilling from the House of Commons Public Accounts Committee, which looked to Amazon's director of public policy Andrew Cecil for answers as to why the company pays such a small amount of tax here in the UK.
"When I buy from Amazon.co.uk, I think I'm buying from a British company," said Margaret Hodge, the Labour chairman of the Public Accounts Committee.
"I get an email telling me it's being delivered from a UK warehouse, and I'm always asked to pay the UK Royal Mail postage."
Andrew Cecil responded, "Amazon.co.uk is the trading name for a company operating in Luxembourg," elaborating that Amazon operates as a "pan European business" to explain why the company doesn't pay 20 percent tax here in Blighty.
"The UK company [Amazon.co.uk] does not own our inventory," he added.
Elaborating further, Cecil said, "We have in excess of 15,000 people in the UK, and we've just announced that we're hiring another 10,000 seasonal employees.
"However, we're operating as a pan European business, so somebody working in a warehouse in the UK, will also be shipping products bought off of our French website, for example."
This response came under scrutiny from the committee, as it was subsequently revealed that these people were being employed by Amazon.co.uk Ltd, and were being paid through a UK company - despite Cecil's claims that Amazon operates as a single European firm.
When quizzed bluntly as to why Amazon wasn't paying corporation tax in the UK, Cecil sheepishly answered, "We pay corporation tax in the UK. We had revenues of £207m in the UK in 2011, and we recorded a tax expense of £1.8m.
"We do pay corporation tax. We have paid tens of millions in business rates in the past few years."
However, this response was met by the sharp tongue of the House of Commons Public Accounts Committee chair, who said, "The community based book shop that you're putting out of business also pays these rates. You're making it uncompetitive."
Still, Cecil didn't get all of the Committee's attention, as the group also quizzed Matthew Brittin, Google vice president for Northern and Central Europe, over the search engine giant's alleged tax avoidance.
However, Brittin seemed to be much better prepared than the Amazon executive, explaining concisely that Google pays as much UK tax as required, and maintaining that it isn't breaking any laws. µ