With a lot of bad press recently about multinational corporations minimising tax massively, the latest news from Amazon comes as a change to the direction of the topic. With sales in the UK totalling £20.6bn, Amazon has added £492m to the UK taxation trolley according to the BBC.

Whilst that is welcome news, it certainly will only partially offset a massive rise in National expenditure, much of which arises from dealing with events of the last couple of years, which heralded an unprecedented fiscal nightmare.

Latest News Comes On The Back Of Recent Woes

Of course, the amount of taxation that will enter the coffers is a welcome financial boost, it comes a day or two after a tax hike of £36,000,000,000 was announced, and elaborated on in Metro.co.uk. Suddenly, the taxation inflow seems a lot less! However, the amount that Amazon is paying will surely show that their association with the UK economy is not all take…there is also a fair amount of giving.

The Guardian has a less optimistic view on this though, saying “Amazon’s key UK business paid just £3.8m more corporation tax last year than in 2019, even as sales increased by £1.89bn.” This in effect says that taxes collected from the shopping giant have not kept pace with the rise in revenue.

How Do Amazon’s Profits Compare…

The same article mentions that Amazon’s takings, which are primarily online sales generated, are about double the takings of Marks & Spencer. This means that traditional leaders in our shopping giants are being dwarfed by the multinational digital retailers. There is a caveat to this though…

Yes, Amazon had double(approximately) the revenue of Marks & Spencer, but…. and it is a big but…their own revenue increased more than 50% from £13.73bn a year before. So, what’s that in plain English?

What this means is that the current snapshot is that Amazon is doing much better than traditional shopping, however it is more of a recent surge that is responsible for this. When your revenue goes from 13 to 20 billion, you are surging.

Is It Only Amazon?

There is no doubt that Amazon has gained popularity traction in recent times, and this will obviously be reflected in their increased revenue. But, there is an underlying trend that needs to also be taken into account. Take, for instance this nugget from the Australian Bureau of Statistics, which noted about online sales:

“In through-the-year terms, the seasonally adjusted series rose 70.8% in October 2020 compared to October 2019. In the 12 months from March 2019 to February 2020, total online sales averaged growth of 14.4%. Coinciding with the shift to online purchasing at the outset of the COVID-19 pandemic in Australia, total online sales has averaged an annual rise of 67.1% from March to October 2020.”

So, Amazon’s increase in revenue is part of a global movement to online purchases, which in themselves have seen a huge surge in the last year of so.

Obviously, Amazon can give themselves a pat on the back for two things: outperforming their probable targets, and, contributing a fair chunk of cash to the local UK economy. However, whether those goals can continue to be achieved when the online retailing surge ends, is something that we will have to wait and see about…

Londonlad
Author: Londonlad

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