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Why Amazon's UK Tax Bill Has Dropped 50% (bbc.com)
An anonymous reader quotes a report from BBC: Amazon has seen a 50% fall in the amount of UK corporation tax it paid last year, while recording a 54% increase in turnover for the same period. This snippet of news raised eyebrows this morning when it was revealed. So what's going on? Taxes are paid on profit not turnover. It paid lower taxes because it made lower profits. Last year it made 48 million British Pounds (BP) or ~$62 million U.S. dollars (USD) in profit -- this year it made only 24 million BP or ~$31 million USD so it paid 7 million BP (~$9 million USD) tax compared to 15 million BP (~$19 million USD). What is more interesting is WHY its profits were lower. Part of the reason is the way it pays its staff. Amazon UK Services is the division which runs the fulfillment centers which process, package and post deliveries to UK customers. It employs about 16,000 of the 24,000 people Amazon have in the UK. Each full-time employee gets given at least 1,000 BP (~$1,297 USD) worth of shares every year. They can't cash them in immediately -- they have to hold them for a period of between one and three years.
If Amazon's share price goes up in that time, those shares are worth more. Amazon's share price has indeed gone up over the past couple of years -- a lot. In fact, in the past two years the share price has nearly doubled, so 1,000 BP (~$1,297 USD) in shares granted in August 2015 are now worth nearly 2,000 BP (~$2,595 USD). Staff compensation goes up, compensation is an expense, expenses can be deducted from revenue -- so profits are lower and so are the taxes on those profits.
If Amazon's share price goes up in that time, those shares are worth more. Amazon's share price has indeed gone up over the past couple of years -- a lot. In fact, in the past two years the share price has nearly doubled, so 1,000 BP (~$1,297 USD) in shares granted in August 2015 are now worth nearly 2,000 BP (~$2,595 USD). Staff compensation goes up, compensation is an expense, expenses can be deducted from revenue -- so profits are lower and so are the taxes on those profits.
Wow, that even already works now that the UK is still in the EU?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
What the fuck are you talking about? Hard work doesn't matter in the UK, we're getting shafted hard and it's only going get harder once they trigger the inevitable nuclear brexit, the harder working the job the harder the shaft. What are these ridiculous and harmful social programs you resent? Do you mean the NHS? Some taxes are worth paying you know. Well, they are if they go to what they're supposed to instead of corporate welfare and massive billion quid bungs to hold on to power.
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
and buy from UK Based retailers that pay proper tax.
If you don't then there won't be any retailers left and Amazon will have won.
expenses can be deducted from revenue
But in this case, the expense is not fixed.
case 1) If AMZN buys/allocates 1,000 BP shares at time T for the employee and holds them in a safe somewhere, it's expense is 1,000 BP. AMZN deducts 1,000 BP from revenue as expense.
case 2) AMZN buys 2,000 BP shares at time T+2 years. AMZN deducts 2,000 BP from revenue as expense.
case 3) AMZN buys 1,000 BP shares at time T. AMZN deducts 2,000 BP from revenue as expense for year T+2years.
Case 3 is obviously fraudulent.
"Hey, let's give corporations tax deductions for the cost of stocks they give to their CEOs!"
"Jolly good idea! CEOs can barely afford a third vacation house and a private jet. They need more shares of stock!"
"WTF? Why are we giving corporations tax deductions for the cost of stocks given to the peasants? This is an outrage!"