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Speaker 1: I want to thank every Amazon employee and every Amazon

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Speaker 1: customer because you guys paid progress. You guys paid problems.

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Speaker 1: This is Megacorp, an investigative podcast exposing some of the

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Speaker 1: world's most unethical corporations. This series is about Amazon. I'm

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Speaker 1: Jake Hanrahan, journalists and documentary filmmaker. Mega Corp is produced

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Speaker 1: by H eleven for cool Zone Media. In this episode,

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Speaker 1: we're going to be stepping out of the warehouse and

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Speaker 1: taking a look at Amazon's financial situation. So as we

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Speaker 1: already know, they're making an unbelievable amount of money, specifically

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Speaker 1: since COVID hit. So let's start by taking a look

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Speaker 1: at their corporation to x in Europe. Last year, Amazon

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Speaker 1: made forty four billion euros in sales income in Europe.

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Speaker 1: That's thirty eight billion pounds and fifty billion dollars. I

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Speaker 1: guess how much corporation tax they paid? Fuckal corporate tax

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Speaker 1: is spased not on revenue but on profit. Amazon was

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Speaker 1: able to claim that they didn't make any profit. Quite

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Speaker 1: the contrary, they actually had some losses. It's unclear at

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Speaker 1: this point where those profits are generated, where those profits

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Speaker 1: are registered. At the moment, it's quite opack and it's

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Speaker 1: quite complicated. Amazon, which has been in Luxembourg since two

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Speaker 1: thousand three, has a very nice arrangement with Luxembourg. At

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Speaker 1: the time when it was under former Commission President johnkla Junker,

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Speaker 1: they were able to pass some sweet deal. This deal

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Speaker 1: remains unclear in many aspects. Luxembourg is known for being

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Speaker 1: a country that offers quite good tack incentives, quite good

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Speaker 1: financial incentives for companies like Amazon. If you're not from

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Speaker 1: the UK or Europe, where you're just not familiar, you

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Speaker 1: might not know what corporation tax is. So let me

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Speaker 1: just explain it briefly. The best description I've seen so

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Speaker 1: far is from the WHICH website. That's w H I

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Speaker 1: c H not which like sorcery WHICH, WHICH is a

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Speaker 1: nonprofit consumer protection organization here in the UK. They do

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Speaker 1: some great work. So here's what they say about corporation tax. Quote.

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Speaker 1: Corporation tax is paid by businesses in the UK and

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Speaker 1: is calculated on their annual profits in a similar way

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Speaker 1: to income tax for individuals. The corporation tax rate has

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Speaker 1: been for all limited companies since April twenties sixteen. Prior

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Speaker 1: to this, the rate varied depending on the company's profits.

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Speaker 1: Unlike in the visuals, companies don't receive any kind of

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Speaker 1: tax free allowance and therefore all profits are taxable. However,

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Speaker 1: there are a number of expenses and deductions that can

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Speaker 1: be claimed to reduce your bill end quote. Now that

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Speaker 1: last sentence is where companies with a lot of money

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Speaker 1: can really go to town on how little tax they pay.

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Speaker 1: So to put this Amazon Corporation tax situation into perspective

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Speaker 1: and to really emphasize how infuriating it is, I thought,

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Speaker 1: why not get a little personal. Basically, I'm going to

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Speaker 1: use myself as an example for a minute. So I

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Speaker 1: run a small media business. It consists of several different

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Speaker 1: projects under the umbrella of my limited company that is

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Speaker 1: popular front this series Megacorp, another series I've done que Clearance,

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Speaker 1: various different projects in video documentary as well. It's all

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Speaker 1: above board. Everything is registered here in the UK. I

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Speaker 1: don't have any full time staff as I can't afford it,

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Speaker 1: so anyone that works for me on any project does

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Speaker 1: so on a freelance basis. Also, let me just say this,

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Speaker 1: due to Britain's outrageous house prices and admittedly my bad

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Speaker 1: credit score because when I was a youth, I was

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Speaker 1: an absolute idiot. I don't have enough money to be

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Speaker 1: able to buy my own house right now. I've been

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Speaker 1: renting since I moved out when I was fifteen years old,

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Speaker 1: and I'm now thirty one. Now you might think, what

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Speaker 1: has that got to do with anything, Well, it's just

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Speaker 1: a little bit more as salt in the wound when

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Speaker 1: you hear that hour was the Bezos ball in a

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Speaker 1: minute now? Anyway, don't get me wrong, I am not

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Speaker 1: in a bad situation at all at all. But bearing

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Speaker 1: all this in mind, you can imagine how annoying it

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Speaker 1: is knowing that I paid more corporation tax in than

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Speaker 1: Amazon did, a company with one point three million staff

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Speaker 1: and a net profit last year of three hundred and

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Speaker 1: eighties six billion dollars. Or in regards to the house,

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Speaker 1: Bezos brought another house last year and it cost him

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Speaker 1: one hundred and seventy five million dollars. Now, you might

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Speaker 1: be listening to this bit thinking, Jake, you sound kind

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Speaker 1: of bitter here. Well, yeah, I am. Let me be honest,

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Speaker 1: I'm not against people making money, and I don't think

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Speaker 1: all rich people should be cast off into the sea

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Speaker 1: or whatever. It is. A lot of the online radicals believe.

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Speaker 1: But if you're making insane profits off the back of

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Speaker 1: a workforce that we now know being treated awfully, I

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Speaker 1: think the absolute very least you can do is payback

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Speaker 1: into the country by accepting that you must pay the

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Speaker 1: correct tax. Now, don't get me wrong, I am definitely

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Speaker 1: not a big fan of any state, and I am

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Speaker 1: certainly not a fan of my government here in the UK.

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Speaker 1: But this is the way things are, Honestly, Sadly, they're

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Speaker 1: just not changing. If you're a mega rich corporation making

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Speaker 1: money under these conditions, you should have to pay the

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Speaker 1: proper tax under these conditions. Why Well, because if you,

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Speaker 1: or me, or your average man and woman on the

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Speaker 1: street earning normal money don't pay their taxes, we go

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Speaker 1: to prison. Your average man or woman is just not

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Speaker 1: rich enough to higher top of the range accountant firms

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Speaker 1: that help you dodge tax. Clearly, Amazon is I say

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Speaker 1: this because what they're doing is actually perfectly legal. Now.

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Speaker 1: I don't know about you, but for me, that makes

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Speaker 1: it all the more frustrating. Clearly, the system as a

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Speaker 1: whole is morally bankrupt. Europe has become a playground for

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Speaker 1: mega corporations. They're able to do acrobatics with their tax

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Speaker 1: payments because they afford to make it work for them.

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Speaker 1: You might just say, oh, well that's business. Well, yeah,

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Speaker 1: that is business. But at the end of the day,

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Speaker 1: people are getting harmed, people are getting abused, while these

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Speaker 1: businesses pay us fuck all back into the country. That is,

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Speaker 1: companies like Amazon willingly abused their most important workers were

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Speaker 1: paying as little as possible back into the country where

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Speaker 1: they live, the country where they make money off of. Now,

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Speaker 1: I guess it's all about economics and politics at this stage,

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Speaker 1: but personally that doesn't sit right with me. Unfortunately though,

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Speaker 1: when it comes to numbers, I am an absolute dunce.

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Speaker 1: So I thought, why not talk to someone that does

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Speaker 1: understand all of this a lot better than I do,

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Speaker 1: an accountant. This is what accountant and writer Adam James

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Speaker 1: Pollock had to say about Amazon. Amazon UK have their

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Speaker 1: own distribution service called amams on UK services and though

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Speaker 1: the pre tax profits increase, the tax bills have been

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Speaker 1: falling over the past couple of years. So of the

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Speaker 1: thing is Amazon can get around this by paying certain

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Speaker 1: employees and shares as a form of something called equity compensation.

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Speaker 1: And as an employee, you know if your mid level

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Speaker 1: managerial upwards, you can get paid through shares through like

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Speaker 1: for example, the UK Government's Share and Center Plan, and

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Speaker 1: for employees it's kind of beneficial as well because you

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Speaker 1: can keep the shares in this for five years, you

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Speaker 1: don't pay any income tax or national insurance on them,

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Speaker 1: so it kind of helps you out there, and then

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Speaker 1: if you sell them as well, you don't pay any

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Speaker 1: capital gains tax. But obviously this helps Amazon as well

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Speaker 1: because they can count as an expense so on their

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Speaker 1: balance sheet they can offset that against their corporation tax.

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Speaker 1: So even though they're paying their employees employees making money,

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Speaker 1: Amazon's making money, nothing's getting done the tax there. So

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Speaker 1: in the UK employees can give up to thirty six

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Speaker 1: hundred pounds worth of free shares per employee per year.

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Speaker 1: So these shares are in Amazon's global corporation, Amazon Inc.

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Speaker 1: It's not the UK a company. So these are increasing

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Speaker 1: on like a drastic rate over the past couple of years.

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Speaker 1: So again upper managerial level has been helped out so much.

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Speaker 1: Amazon is being helped out so much, and the people

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Speaker 1: that are losing out as usual is the general public.

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Speaker 1: Since in the UK h m r C can collect

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Speaker 1: on it and the lower level workers who can be

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Speaker 1: concerted in this way, so they still have to pay

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Speaker 1: national insurance all that sort of stuff. And Luxembourg has

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Speaker 1: something to do with this, right from what I was reading. Yes,

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Speaker 1: so tax paid on the UK profits isn't actually publicly

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Speaker 1: available information because UK customers are booked through the UK

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Speaker 1: based branch off a Luxembourg based Amazon company which handled

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Speaker 1: lots of European you know branches, so France, I think

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Speaker 1: Spain as well. That Luxembourg subsidiary is technically a loss

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Speaker 1: making company because it has process work can carry forward

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Speaker 1: these losses over several years and if you're not booked

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Speaker 1: as making a profit it you can't actually pay tax

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Speaker 1: on it. If you if you're making losses, there's nothing

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Speaker 1: that they can tax there because the taxes paid in profit,

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Speaker 1: not on sales, so you know they're selling loads of

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Speaker 1: stuff as they do, they still can't get taxed on it.

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Speaker 1: But as well as that, there's something like called the

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Speaker 1: independent entity principle, and through that subsidiaries like say for

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Speaker 1: example Amazon Web Services based in the UK that yeah,

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Speaker 1: it's like kind of a separate company, so they are

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Speaker 1: viewed in legalizes only providing support services to Amazon, rather

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Speaker 1: than actually being a part of the company, there are

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Speaker 1: separate entity so it's not viewed as an Amazon company.

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Speaker 1: It's viewed as like just any service providing company. So

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Speaker 1: that means that they can apply a principle, you know,

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Speaker 1: it's one sided method to determine appropriate tax or profit

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Speaker 1: taking this subsidiary in isolation from the group, and it

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Speaker 1: applies a benchmark rate based on things such as operating costs.

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Speaker 1: So for Amazon in the industry it's in you've got

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Speaker 1: services such as warehousing and delivery and marketing. They're all

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Speaker 1: generally very low margin businesses. So when you take these

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Speaker 1: Amazon like subsidiary service providing branches, those smaller ones are

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Speaker 1: also generally low margin businesses, so the profits they declare

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Speaker 1: are very low. And this links back Luxembourg as well,

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Speaker 1: because since the accounts for the Luxembourg you know overall

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Speaker 1: parent and company if you want, are not broken down

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Speaker 1: on a poor country basis because they don't have to

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Speaker 1: do that legally, so why would they. We actually have

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Speaker 1: no idea how much tax the UK branch will play.

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Speaker 1: It's not possible to work out unless Amazon declares it

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Speaker 1: and they don't have to write Now they don't have to.

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Speaker 1: They're absolutely no need to. And it's the same for

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Speaker 1: all the Amazon companies in Europe that are branches off

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Speaker 1: the Luxembourg one. So chances are it's just treated as

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Speaker 1: the same as the web service as example, where it's

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Speaker 1: just seen as supplying services, managing set else in that case,

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Speaker 1: and then declared very little profit because of that. Wow.

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Speaker 1: So this is a massive loophole essentially, right, I mean legal,

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Speaker 1: but a loophole. It sounds like, yeah, it's legal, completely legal,

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Speaker 1: but that kind of makes it worse because it's less

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Speaker 1: converted out in the open, so they can't know that

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Speaker 1: there's nothing you can do about it, and they're just

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Speaker 1: laughing at you in a way. After hearing that, it

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Speaker 1: will probably be no surprised. But it's not just Europe

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Speaker 1: where Amazon has been swerving their taxes for several years.

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Speaker 1: Amazon paid no federal income tax in America in eighteen. Specifically,

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Speaker 1: Amazon paid zero dollars US federal income tax on their

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Speaker 1: eleven billion dollar profits that year. In fact, not only

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Speaker 1: did they pay no federal income tax on their profits,

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Speaker 1: they actually received a one hundred and twenty nine million

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Speaker 1: dollar tax rebate from the federal government Effectively, that's a

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Speaker 1: tax rate of minus one percent. One of the main

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Speaker 1: reasons Amazon is able to do this, though, is due

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Speaker 1: to the Tax Cuts and Jobs Act, a federal tax

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Speaker 1: bill enacted by US Congress in twenty seventeen. This bill

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Speaker 1: lowered these statutory corporate tax rates from thirty five percent

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Speaker 1: to twenty one percent. This made the rate lower whilst

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Speaker 1: also leaving open tax loopholes, which, according to the Institute

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Speaker 1: on Taxation and Economic Policy senior fellow Matthew Gardner, allow

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Speaker 1: profitable companies to routinely avoid paying federal and state income

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Speaker 1: taxes on almost half of their profits. In a report

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Speaker 1: from February one, Gardner wrote, a great explanation of all this.

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Speaker 1: Now this is quite a long quote, but I think

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Speaker 1: it's worth it. He really sums it up here, Gardner said, quote.

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Speaker 1: The mechanisms the company is using to drop its effective

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Speaker 1: tax rate mostly unchanged. The company saved one point eight

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Speaker 1: billion dollars using tax breaks for stock options, and it

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Speaker 1: saved six hundred thirty nine million dollars using various tax

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Speaker 1: credits over the eighteen to twenty period. Amazon also enjoyed

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Speaker 1: the appreciation breaks, although they had no net effect on

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Speaker 1: the company's tax bill in Appreciation breaks allow a company

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Speaker 1: to deduct the costs of investments in equipment much more

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Speaker 1: quickly than the equipment wears out. Proponents in Congress claim

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Speaker 1: this encourages investments and helps the economy overall, but more

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Speaker 1: likely it rewards companies making investments they would have made anyway.

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Speaker 1: The effects of depreciation breaks are complex. Part of the

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Speaker 1: effect is to move tax payments further into the future,

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Speaker 1: even though the net effect in the long run reduces

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Speaker 1: the company's tax liability. This makes it important to look

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Speaker 1: at a company like Amazon over several years, and from

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Speaker 1: this perspective, it's clear that the nation's tax code barely

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Speaker 1: lays a glove on Amazon. Amazon's tax avoidance is consistent.

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Speaker 1: Over the past three years, Amazon paid an effective federal

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Speaker 1: income tax rate of just four point three percent on

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Speaker 1: US income. Over the past ten years, Amazon's effective federal

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Speaker 1: tax rate on fifty seven billion dollars of US pre

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Speaker 1: tax income was just four point seven percent, especially remarkable

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Speaker 1: given that the legal rate was thirty five for most

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Speaker 1: of this period. For any other company, one point eight

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Speaker 1: billion of current federal income taxes would be interpreted as

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Speaker 1: a signed the company's tax accountants had taken the year off,

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Speaker 1: but in Amazon's case, the one point eight billion dollars

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Speaker 1: the company paid is over sallowed by the two point

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Speaker 1: three billion it did not pay last year. These unpaid

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Speaker 1: taxes are especially troubling because Amazon's pandemic experience is utterly

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Speaker 1: different from the existential threats facing entire industries. Far more

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Speaker 1: typical of the economy is companies reporting created sales and

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Speaker 1: zero profits. In this setting, it's vital that our tax

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Speaker 1: system in America should perform as advertised, and when Amazon

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Speaker 1: shelters more than half its profits from tax, our tax

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Speaker 1: system is clearly in need of reform end quote. So basically,

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Speaker 1: a complicated combination of various tax credits, deductions, and investment

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Speaker 1: in equipment has allowed Amazon to pay it little or

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Speaker 1: no taxes for a long time, completely legally. In March,

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Speaker 1: he won. This got so much attention that US President

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Speaker 1: Joe Biden addressed Amazon by name when saying he planned

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Speaker 1: to stop big corporations using all of these tax loopholes.

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Speaker 1: He said, quote a fireman, a teacher paying twenty two

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Speaker 1: percent tax, Amazon and ninety other major corporations paying zero

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Speaker 1: in federal taxes. I'm going to put an end to

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Speaker 1: that end quote. Of course, he's yet to put an

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Speaker 1: end to that. However, it seems that Amazon has been

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Speaker 1: on his mind for a while. Here's what he had

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Speaker 1: to say about Amazon's tax situation in before he was

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Speaker 1: even elected president. I think if Amazon should start paying

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Speaker 1: their taxes. Okay, I don't think any company. I don't

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Speaker 1: give a damn how big they are. The Laura Almady

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Speaker 1: should absolutely be in a position where they pay no

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Speaker 1: tax to make billions and billions and billions of dollars

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Speaker 1: Number one. Now, to play devil's advocate here or whatever

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Speaker 1: you'd call it, is this the fault of Amazon or

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Speaker 1: the state? Who's to blame here? Ethically, Amazon has chosen

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Speaker 1: the path of hard core tax avoidance, but that is

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Speaker 1: not the same as tax fraught. It could be argued

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Speaker 1: that Amazon cares very little about ethics based on the

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Speaker 1: way they treat their warehouse workers, So why should they

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Speaker 1: care about paying their taxes properly when legally they've done

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Speaker 1: nothing wrong. Effectively, in the eyes of the law, they

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Speaker 1: sort of have paid it properly. The problem, it could

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Speaker 1: be said, is the system itself. In response to Joe Biden,

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Speaker 1: Amazon's senior Vice President for Policy and Press, j Kenney

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Speaker 1: tweeted the following quote. If the R and D tax

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Speaker 1: credit is a loophole, it's certainly won. Congress strongly intended.

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Speaker 1: The R and D tax credit has existed since one

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Speaker 1: was extended fifteen times with bipartisan support, and was made

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Speaker 1: permanent in twenty fifteen in a law signed by President Obama.

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Speaker 1: End quote. Now J. Carney would know. He was Obama's

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Speaker 1: White House Press secretary and ironically enough, Biden's communications director

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Speaker 1: when he was the Vice president under Obama. Now, I

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Speaker 1: hate to say it, but J. Carney has a point here.

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Speaker 1: There is no way this tax loophole was left in

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Speaker 1: by accident. Many politicians in the US, both Republican and Democrat,

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Speaker 1: talked to about changing tax loopholes that they actively benefit from.

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Speaker 1: If the system is corrupted, why shouldn't a company like

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Speaker 1: Amazon take advantage of it? Let's hear what else boy

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Speaker 1: And had to say in that interview. And I came

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Speaker 1: from the corporate capital of the world, Delaware, and I'm

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Speaker 1: not anti corporate, but here's the deal with idea that

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Speaker 1: they made a several trillion dollars and all the studies

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Speaker 1: show that fifty percent went to buy back their stock,

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Speaker 1: thirty seven percent to make sure their stockholders got rewardingly,

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Speaker 1: then nine percent for research, development, racist employment, et cetera.

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Speaker 1: Come on, man, that's not the capitalist system, isn't it.

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Speaker 1: It seems like Amazon are just playing the system as

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Speaker 1: the politicians set it up. But whatever, they can do

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Speaker 1: what they want, but they're not Robin Hood out here

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Speaker 1: or anything like that. They managed to make an absolute

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Speaker 1: fortune by avoiding tax, especially throughout the pandemic, and they

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Speaker 1: chose to reinvest almost none of it into the warehouse

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Speaker 1: workers who are breaking their next to make sure the

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Speaker 1: company stays running on time. They're swerving tax, treating their

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Speaker 1: workers badly, along with a ton of other scandals that

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Speaker 1: will go into later in the series. At the very least,

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Speaker 1: I think they could stop acting like an ethical company

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Speaker 1: in their press releases and when they're talking to the public,

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Speaker 1: because clearly that is just not true. Now here's something else.

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Speaker 1: This will again be no surprise to you at this point.

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Speaker 1: But Bezos himself is of course no stranger to tax avoidance.

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Speaker 1: According to a twenty twenty one Pro Publica article, Jeff

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Speaker 1: bezos Is personal wealth grew by a massive ninety nine

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Speaker 1: billion dollars from the years twenty fourteen to eighteen. However,

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Speaker 1: he reported a growth of a measly four point two

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Speaker 1: billion dollars. He paid nine hundred and seventy three million

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Speaker 1: dollars tax on that, which is a hell of a

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Speaker 1: lot of money, sure, but in context to what he

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Speaker 1: really made, he paid a tax rate of less than

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Speaker 1: one percent zero point nine eight percent. To be exact,

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Speaker 1: the richest man in the world paid less than one

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Speaker 1: percent tax on ninety nine billion dollars. Now, look at

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Speaker 1: all this, it reminds me of the aura borous, the

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Speaker 1: snake that eats its own tail. Amazon wouldn't be able

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Speaker 1: to legally avoid all this tax the way they do

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Speaker 1: if the rich and powerful politicians of this world hadn't

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Speaker 1: set the game up to be rigged in the first place.

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Speaker 1: Now I'm not really even trying to get all political here.

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Speaker 1: I think it's clear it's a fact that if you

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Speaker 1: have enough money, you can avoid certain laws so effectively

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Speaker 1: that you can do it legally. That's exactly what Amazon

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Speaker 1: has been doing with their taxes. We're taking a break

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Speaker 1: over Christmas, so the next episode of Megacorp will be

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Speaker 1: with you at the stat of January two. Tune in

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Speaker 1: then to hear about yet another Amazon scandal as we

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Speaker 1: dive into the many cases of Amazon spying on their

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Speaker 1: own customers and helping international intelligence agencies to do the same.

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Speaker 1: It's all a out to get even darker. Mega Corp.

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Speaker 1: Is made by my production company H eleven for Cool

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Speaker 1: Zone Media. It's written, researched, and produced by myself, Jake Hanrahan.

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Speaker 1: It was also produced by Sophie Lichtman. Music is by

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Speaker 1: Some Black, graphics by Adam Doyle and sound engineering by

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Speaker 1: Splicing Block. If you want to get in touch, follow

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Speaker 1: me on social media at Jake Underscore Hanrahan. That's h

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Speaker 1: A N A A h A n