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 working 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 chair of the House of Commons 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."
Cecil responded: "Amazon.co.uk is the trading name for a company operating in Luxembourg."
Amazon operates as a "pan-European business" he added to explain why the company does not pay 20 percent tax in the UK.
"The UK company [Amazon.co.uk] does not own our inventory," he added.
"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," said Cecil.
"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 said: "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, Hodge was unimpressed.
"The community-based book shop that you're putting out of business also pays these rates. You're making it uncompetitive," she said.
Still, Cecil didn't get all off the Committee's attention, as it also quizzed Matthew Brittin, vice president of Google in Northern and Central Europe, over the search engine giant's alleged tax avoidance.
However, Brittin seemed to be much better prepared than the Amazon exec, explaining concisely that Google payed as much UK tax as it is required to do so, and that it wasn't breaking any laws.
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