Why does Amazon pay so little tax in the UK?

Amazon's business model is often described as 'tax efficient,' which allows the company to minimize its tax liabilities in the UK. This is largely achieved through strategic financial practices, such as routing profits through subsidiaries in low-tax jurisdictions like Luxembourg. As a result, Amazon can offer lower prices than traditional brick-and-mortar retailers, which do not engage in such tax strategies. This competitive advantage not only diminishes the market share of smaller retailers, who contribute to the local tax base, but also leads to a broader decline in overall corporation tax revenue. Consequently, the combination of Amazon's tax strategies and the reduction in the number of smaller, tax-paying retailers creates a significant impact on the UK's tax landscape, ultimately resulting in Amazon paying relatively little tax compared to its substantial revenues.