Amazon paid just €16.5m (£15m) in tax on European revenues of €21.6bn (£19.5bn) reported through Luxembourg in 2016.
The figures, published in Amazon’s latest annual accounts for its European online retail business, are likely to reignite the debate about US technology companies using complex cross-border arrangements to minimise the tax they pay across the continent.
Separately, Amazon UK Services – the company’s warehouse and logistics operation that employs almost two-thirds of its 24,000 UK staff – more than halved its declared UK corporation tax bill from £15.8m to £7.4m year-on-year in 2016.
The cut came despite turnover at the UK business, which handles the packing and delivery of parcels and functions such as customer service, rising from £946m to £1.46bn.
Ana Arendar, Oxfam’s head of inequality, said: “Despite some action by ministers and companies, widespread corporate tax avoidance continues to cost both rich and poor countries billions every year that could pay for schools and lifesaving healthcare.
“We urgently need comprehensive public country-by-country reporting for multinationals to ensure they pay their fair share of tax – the UK government should implement this by the end of 2019 – unilaterally if necessary.”
Amazon Europe, which is based in Luxembourg and aggregates the billions of pounds of sales the retailer makes from individual countries across the continent, reported a pre-tax profit of €59.6m last year. As a result the company, which clocked up €21.6bn in sales across Europe last year, had a tax bill of just €16.5m.
Amazon is a hugely successful business but makes slim margins on the products its sells – the company recently warned that it may report a loss in the third quarter – and with low profits comes a low tax bill.
“Amazon pays all the taxes that are required in every country where we operate,” said a spokesman. “We operate a pan-European business from our headquarters in Luxembourg where we have over 1,500 employees and growing, including our senior leadership team. We’ve invested over €20bn in Europe since 2010, and expect to hire 15,000 new employees this year, bringing our total permanent European workforce to over 65,000 people.”
Revenue from Amazon’s UK retail sales are reported through a separate company in Luxembourg. However, in its US filings the company reveals that UK revenues hit £7.3bn last year.
For accounting purposes Amazon Services UK reports turnover as a charge to the parent company for the cost of delivering products, which was £1.46bn last year.
The company received a tax credit of £1.3m from the UK authorities, which it will be able to deduct from future tax bills. Pre-tax profits halved from £48m in 2015 to £24m last year.
Amazon will not reveal how much it paid in total to HMRC last year, beyond the £7.4m attributed to Amazon Services UK.
It has also emerged that Amazon UK’s warehouse and logistics staff and management enjoyed a bumper £95m payout from the company share scheme, thanks to its surging share price.
Amazon said that on average the thousands of staff who handle orders received more than £2,200 per person last year. More senior staff are likely to have taken home considerably more from the share scheme.
The average pay for an Amazon Services UK employee is £29,000, according to its latest financial filing at Companies House.
The level of the share-based payout grew year-on-year along with the soaring Amazon share price, which last month resulted in the company’s founder, Jeff Bezos, briefly overtaking Bill Gates to become the world’s richest man, worth £70bn.
Last year’s staff shares paid out at an average stock price of $704, up 50% from the average share price in 2015 of $467m. Staff can look forward to another bumper pay day this year with Amazon’s share price at $980. Last month Amazon’s stock market value hit $500bn.
In 2015, Amazon said it would stop using controversial corporate structures that diverted sales and profits away from the UK following a clampdown by the government with the introduction of George’s Osborne’s diverted profits tax.
In July, Amazon announced it was to expand its UK workforce by 5,000 permanent roles this year. It is also opening new warehouses that will bring the number of fulfilment centres it has in the UK to 15.