Amazon, and other online retailers face the possibility of a double tax raid as the Treasury seeks to re-balance the weight between booming online businesses and the High Street. Media reports quoted sources close to Chancellor Rishi Sunak as saying the current taxation system around online businesses is “killing the High Street.” Reports also suggest that Downing Street's policy unit are looking into the possibility of a Covid windfall tax which will target “excessive” profits of those who have cashed in during the pandemic.
Tech firms and online retailers may be called in to present their views on a new tax plan. The 'Amazon Tax', as it has been dubbed, seeks to target major online retailers posting huge profits while avoiding pricey high street rent costs and overheads. The online sales tax could be introduced as part of a business rates shake-up.
Online retailers like Amazon currently pay business rates on their huge warehouses and offices. However, they have no need for expensive High Street stores like traditional retailers, which often attract big business rates. There is a visible advantage as online players like Boohoo and Asos have been able to keep costs down by avoiding the expensive rents paid by their High Street rivals.
The update comes at a time when Amazon's British sales increased by 51 per cent last year to £19.5billion. However, Amazon UK paid only £14.5 million in corporation tax in 2019. The firm said its tax bill was offset by government incentives related to its investment in infrastructure. Treasury officials, according to media reports, hope to use the money from a one-off Covid windfall tax on these companies, to help cover the £300 billion cost of Covid on the country.
Neither of these taxes are expected to be introduced in March's upcoming budget. However, originally reported by the Sunday Times, both could play a key role in the Treasury's plan to slash Britain's £2 trillion debt.
