Amazon starts paying corporation tax for UK sales in Britain, not Luxembourg

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Online retailer Amazon has started paying UK corporation tax in Britain rather than in Luxembourg, after it came under fire for avoiding tax.

Earlier this month, Amazon changed how it pays corporation tax and established a London branch of its main retail company, which was previously based in the tax haven of Luxembourg.

The changes will enable HM Revenue & Customs to claim taxes on sales Amazon makes in the UK.

It will now make similar moves in other EU countries.

However, the firm has pre-empted scrutiny, and warned that the tax payments are unlikely to be big.

In a statement seen by the Financial Times it said it started “the process of establishing local country branches” of its main retail firm in Europe – called Amazon EU Sarl - more than two years ago.

“As of May 1, Amazon EU Sarl is recording retail sales made to customers in the UK through the UK branch. Previously, these retail sales were recorded in Luxembourg,” it said.

And after it reported a loss of $403 million (£260), it stressed that corporation tax is based on profits, not revenues.

“E-commerce is a low-margin business and highly competitive, and Amazon continues to invest heavily around the world, which means our profits are low," the statement read.

In recent years, Amazon and fellow corporate giants Starbucks and Google have been under increasing pressure to pay tax on their British sales.