UK e-tail is paying off all round

 
Marc Sidwell
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THE UK component of Amazon’s European revenues is a startling figure. Amazon’s sales hit €9.1bn (£7.3bn) across the continent last year. The new data shows it took in £2.91bn, or almost 40 per cent, from amazon.co.uk alone, and another £441m from other UK business such as Lovefilm.

With Amazon getting 45 per cent of its European income from the UK, despite dedicated websites for France, Germany, Spain and Italy, it needs Brits’ loyalty. The new figures also show the VAT revenues brought in by Amazon’s UK sales.

Amazon UK’s corporation tax payment of just £1.8m for 2011, thanks to a legal if convoluted tax structure, generated political outrage. It certainly made the case once again for a simpler tax system, but as these figures also reveal, the liabilities in question are dwarfed by the £416m in VAT generated last year by Amazon.co.uk’s sales. And for the last two years these VAT revenues have increased by more than 50 per cent a year. Web sales are booming – and that’s a good thing all round.

The figures are also a reminder of Amazon’s wafer-thin margins. It earned just £74m in pre-tax profit on its £3.351bn of UK sales, a bare 2.2 per cent. The cost Amazon pays for each sale is at the edge of sustainability. Consumers would count the cost if it paid more tax.