The Seattle Times has just ran an interesting piece on Amazons tax-avoidance schemes in Europe. No doubt The Passive Voice will carry this later today with PG explaining how Amazon is meeting the letter of the law (while continuing to totally ignore instances where it clearly isnt, such as its being sued by the FTC for fleecing its own customers of millions of dollars) but the letter of the law isnt always enough. Starbucks is in the process of establishing a UK headquarters for its UK operations after consumers started voting with their feet over the way Starbucks somehow managed to do business in the UK and pay no taxes. Leaving aside more important issues such as trades descriptions – how can anyone legally call that gnats’ piss coffee? – it’s a brave, bold and welcome move by Starbucks. Amazon remains adamant that it will carry on regardless. As the ST article reminds us, when Amazon’s European head of policy, Andrew Cecil, was hauled before the British Parliament on the specific remit of explaining its UK sales and tax policies, Cecil did enormous damage to Amazon’s reputation with his weasel words and blunt refusal to actually answer the questions. Check it out here on youtube - https://youtube/watch?v=cETKO42wMOs&feature=youtu.be In 2013 Amazon’s UK sold (in US$ equivalence) $7 BILLION worth of goods, yet paid just $7 MILLION in taxes to the UK authorities. It’s a similar story across the Amazon satellite sites. It’s not the only tax avoidance going on. In the UK domiciled ebook retailers like Waterstone’s, Sainsbury and Tesco Blinkbox have to charge the full legal rate of VAT (around 20%) on every ebook sold. Amazon exploits a tax loophole to charge just 3%, which is one of the key reasons the Kindle is still the dominant retailer in the UK. Not for long. In January that particular tax loophole closes and Amazon (and also Google Play and Apple) will have to charge the full rate. Which will mean Kindle UK list prices go up significantly, except where Amazon chooses to carry the difference. Given Amazon’s current precarious finances that’s unlikely, especially for indies. I’ll post here soon on exactly how the VAT loophole closing will impact on us indies selling in the UK and why this increases the likelihood Amazon will put all KDP titles into KU in October. In July the European Commission requested full disclosure of Amazon’s tax arrangements with Luxembourg. That investigation will be a long time completing and may well conclude Amazon is indeed within the letter of the law (though as the FTC law suit against Amazon shows, the company is becoming increasingly careless). What’s not in question is that the European tax laws will be tightened up and companies like Amazon, Apple and Google will all see their tax advantages diminishing. For Google and Apple that will be a minor irritation. They have revenue and make profits Amazon can only dream of. For Amazon, by its own guidance likely to post a three-quarter billion dollar loss for Q3 (this from a company with $90 billion revenue and a valuation of $150 billion - you couldnt make it up...), it’s one more problem they could do without.
Posted on: Sun, 24 Aug 2014 09:38:52 +0000
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