Amazon's UK arm has reported profits of more than $2bn, yet the company received a tax credit, raising questions about the effectiveness of the UK's corporate tax system. The tech giant's UK division, Amazon UK Services, disclosed in its latest financial filings that it made a pre-tax profit of £1.6bn ($2.1bn) in 2025, up from £1.1bn the previous year. Despite this, the company received a tax credit of £37m, meaning it paid no corporation tax and actually gained from the tax system.
How the tax credit works
The tax credit is largely due to the UK's system of capital allowances, which allows companies to deduct the cost of investments in equipment and infrastructure from their taxable profits. Amazon has been investing heavily in its UK operations, including new warehouses and data centers, which has generated significant capital allowances. Additionally, the company has used past losses and other tax reliefs to offset its profits.
Criticism and response
The revelation has sparked criticism from tax justice campaigners, who argue that large tech companies are exploiting loopholes in the tax system. "It's outrageous that Amazon can make billions in profit and still get a tax credit," said a spokesperson for the Tax Justice Network. "The UK government needs to close these loopholes and ensure that profitable companies pay their fair share."
Amazon defended its tax practices, stating that it complies with all UK tax laws and pays all taxes required. "We have invested billions in the UK, creating thousands of jobs, and we are proud of our contribution to the economy," an Amazon spokesperson said. "Our tax position reflects the incentives the government has put in place to encourage investment."
Broader implications
The case highlights ongoing debates about corporate tax avoidance and the effectiveness of tax incentives. The UK government has introduced measures such as the diverted profits tax and the digital services tax to address these issues, but critics say they are not enough. The issue is likely to remain a hot topic as the government seeks to balance attracting investment with ensuring fair taxation.
