Amazon’s implication that its corporate tax payments in the UK are very low partly because of its high investments in this country is both misleading and disingenuous (Amazon halves UK corporation tax bill to £4.5m as profits treble, 3 August). Investments in, for example, buildings and machinery are financed by a combination of loans, shareholders’ funds and net earnings – crucially – after tax.
In other words, investments do not reduce a company’s tax liability except by very minor amounts of later depreciation. For the bewildered public, this disingenuousness is compounded by the failure of media commentators to press Amazon accordingly to justify its explanation.
• I have heard and read many media reports on “Scamazon” and its low tax bill, yet not one single report attempts to join the dots.
If Amazon is lowering its corporate tax bill by distributing share awards to its employees, they will pay income tax on the additional income at their highest marginal rate. Thus the exchequer will still benefit and, if enough beneficiaries are higher-rate taxpayers, then the exchequer may even receive more receipts than due under corporation tax.
Littlehampton, West Sussex
• I wonder why the UK doesn’t follow what’s being trialled in Italy? There Amazon, and all retail businesses, have a tax of 7% levied on all sales made to residents in that nation. That tax can then be offset against corporation tax, meaning that conventional retailers suffer no increase in their overall tax. And Amazon ends up paying a fairer amount of tax on their real activities.
Worthing, West Sussex
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