There has been much anguish expressed about the latest Amazon accounts for its UK operating company. This is unsurprising. Those accounts suggest that Amazon has increased its UK activity from £1.45bn of sales in 2016 to £1.99bn of sales in 2017, with its profits increasing threefold from £24m to £72m. Yet its overall apparent tax charge was still a minuscule £1.7m.
However, all is not as it seems. Once the tax effect of payments made to staff using share option schemes is taken out of account, this company looks as if it paid £4.7m in tax in 2017, compared with £3.7m the year before. That’s actual cash paid, and it suggests a tax rate of approximately 6.4% in 2017 compared with 15.5% in 2016. Given that the expected tax rate for the 2017 accounts was 19.25%, Amazon appeared to pay only a third of what might have been due.
Amazon explains the fuss by referring to the effect of those share payments. But that’s a sideshow, in my opinion.
Well, it would help if the accountant writing this article were able to do the most basic reading of accounts. Share options, awards, they’re part of paying the staff. They’re an expense, which is why they’re not part of the profits which make up the bit taxed.
So, what were the profits after we take off the cost of those share awards? And what is the percentage of those post all costs of business then paid in tax?
No, not what is he tax paid as a percentage of profits before all costs, but what is the percentage of profits paid as tax as a percentage of taxable profits?
Do note that The G isn’t allowing comments on Spudder’s piece.