Can Amazon Avoid UK Tax for Another Two Years?

Amazon might not need to pay taxes in the UK for the next couple of years thanks to one conservative British politician.

Amazon may not be required to pay UK tax for another two years after former Chancellor of the Exchequer Rishi Sunak established benefits for businesses who invest in infrastructure during the pandemic. Fair Tax Foundation released research that showed how the tech giant claimed over £800 million or $965 million in capital allowances oor business expenses that can be offset against profits in 2021, even £500 million or $603 million more than when the pandemic began in 2020.

According to The Guardian, Amazon was able to achieve these numbers mostly due to the "super-deduction" scheme for businesses that was established by Sunak when he served as chancellor in 2021. This scheme allowed businesses to claim allowances of up to 30% more than the value of investment between April 1, 2021 and March 31, 2022.

This meant that Amazon was given up to £75 million or $90.5 million in UK tax deductions for the year to December 2021, the foundation said, resulting in absolutely no tax to pay in 2021. Moreover, based on an estimated £250 million or $302 million of trading losses from 2021, Amazon has been able to set aside about £66 million or $80 million against its UK tax bill for next year.

Why Does Amazon Have a UK Tax Discount?

In 2021, Amazon confirmed that it invested more on its warehouses and logistics systems as it expanded its operations. The big tech company invested over £2.3 billion or $2.7 billion in infrastructure that same year when it opened five new warehouses in Swindon, Dartford, Gateshead, Hinckley and Doncaster. Three of these locations were even equipped with robotics technology.

Amazon is not only benefitting from investing and getting huge UK tax cuts, but also ensuring that they pay less taxes in the future. Sunek's scheme was designed to encourage companies to invest ahead of a pending corporation tax hike.

Fair Tax Foundation chief executive Paul Monaghan described it as "an enormous £27 billion ($36.6 million) sly handout to big businesses that are generating profits" on top of the cancellation of about $23 billion annually because the UK tax increase was canceled. Monaghan added that many businesses felt "uncomfortable" as to how Amazon is getting huge UK tax discounts or even cuts because "majority of profitable enterprises in the UK are happy to make a fair and meaningful tax contribution."

Read Also: Alphabet Q2 Earnings Report Show $2.5 Billion Drop from Last Year

Amazon to Receive a Tax Break in the US As Well

Amazon is not only getting huge UK tax discounts, but is also set to pay lower taxes in the US. According to the New York Post, Amazon is set to receive a tax break of up to $124 million thanks to its commitment to build a warehouse near Buffalo, New York.

The report revealed that state-run Niagara County Industrial Development Agency is urging Amazon to build a $550 million, 216-acre warehouse that would provide 300 construction jobs and 1,000 warehouse positions in exchange for the tax cut. The tax subsidy will be paid for partly from revenue that is reserved for the Niagara Wheatfield Central School District, which receives almost half of its revenue from local property taxes.

However, labor unions and corporate watchdogs are ready to oppose the New York tax break for Amazon, claiming it will increase the cost of living. Amazon and local officials in New York have been quietly negotiating this deal for two years now, causing critics to raise concerns about the public not being given a chance to share their thoughts and concerns about it.

Related Article: Google Internally Announces Temporary Hiring Freeze - How Long Will It Last?

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