The news led to calls for a shake-up of European tax rules to force the multinational firm to pay its “fair share of taxes”.
The company paid only £4.2 million in UK corporation tax last year, despite generating sales of £4.3bn here – a rate of about 0.1 per cent. HM Revenue & Customs (HMRC) website states that the “main rate of corporation tax” – where profits are above £1.5m – should be 21 per cent.
Amazon is also reported to have received a rebate worth £4m from Luxembourg authorities. The accounting strategy is legal. It is not clear how much Amazon would have paid in tax had it not used the system.
Amazon has received more than £10m in financial assistance from the Scottish Government. The firm has a distribution centre in Dunfermline and a call centre in Edinburgh.
Scottish Labour finance spokeswoman Jenny Marra said: “Amazon operates a big warehouse in Scotland and all the people who work there and who buy products from the company would expect it to pay its share.”
Amazon was accused of “taking the taxpayer for a ride” by Scottish Green co-leader Patrick Harvie MSP.
Customers here purchase goods through the Amazon.co.uk website, but the payment is booked through its Luxembourg operation. Amazon then pays its UK operation a fee to deliver the orders. It also makes payments for use of intellectual property (IP) from one Luxembourg arm to another. The country’s headline corporate tax rate is 29 per cent, but income earned through IP can be exempted by up to 80 per cent, cutting the rate to below 6 per cent.
Mr Harvie said: “This is taking the taxpayer for a ride. If a company is going to be part of the marketplace, they have got to pay their fair share of taxes.”
SNP MSP John Wilson said: “In an independent Scotland, I would expect the tax authorities to work with other tax regulators in Europe to ensure all companies pay the tax due in the countries where the money is earned.”
Scottish Liberal Democrat leader Willie Rennie said Westminster was taking action to tighten laws, but pushed for the moves to be accelerated.
A spokeswoman for HMRC said: “HMRC has a duty to ensure all taxpayers pay the tax due in accordance with UK tax law, and we do so consistently.”
Amazon said it pays “all applicable taxes in every jurisdiction” where it trades. It added: “We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operations.”