Multinational Companies and UK Corporation Tax

Nick Smith Excerpts

Thursday 27th June 2013 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

In the past 15 years, the world of e-commerce has become a fundamental part of our lives. It has shaped the way companies do business, how money is handled and many of our shopping habits, but it has also changed the nature of business on a global scale and therefore our ability to levy a fair level of taxation has fallen behind.

In my work with the Public Accounts Committee, I have seen the massive rewards for e-commerce leaders. As has been pointed out, Amazon alone made £4.3 billion of sales last year in the UK, yet by running its sales through Luxembourg it paid a meagre £2.4 million tax bill in 2012. That is less than one tenth of 1% of sales and that is just not good enough.

It would be remiss to ignore the thousands of jobs that such companies have created, but when our grants to those companies outpace the returns in tax, questions must be asked. In Wales alone, the Welsh Government have thrown millions at Amazon to bring it to Swansea. An £8.8 million regional selective assistance grant was given to bring the company into the city, while a £3 million link road entitled “Amazon way” finished construction late last year. So, we have a regional Government supporting regeneration and jobs, but the money from the Treasury used to fund that growth is not being recovered.

The Public Accounts Committee, of which I am a member, concluded that Her Majesty’s Revenue and Customs needs real teeth to be able to challenge the artificial nature of how businesses set up to avoid tax, as well as to be able to push against antiquated international tax laws. It is time for the Government to get a grip on tax avoidance.

E-commerce will increase as our appetite for doing our business online grows exponentially. Perhaps when he sums up, the Minister will reflect on examples such as the double benefit gained by Amazon thanks to the incentives it has received to set up in Wales and other places while we still suffer the loss of corporation tax revenue. I know the companies pay local rates and national insurance and have employees who pay tax too, but that does not excuse the times when they trouser our support and avoid corporation tax. Will the Government review the company support criteria in such cases? If companies like Amazon are not going to deliver, perhaps it is time that we all had a refund.