The British Retail Consortium is setting up a working group to look at the burden of taxation now suffered by the High Street retail sector in the UK. They are concerned that online retailers have an unfair advantage as they pay less business rates and employ fewer staff than their High Street competitors.

Recent research has revealed that High Street retailers have seen a significant rise in business rates in recent years. This, coupled with employment taxes and corporation tax payments, compares unfavourably with online competitors who are able to “organise” the residence of their profits to offshore tax areas that offer lower tax arrangements.

For example, in 2011 Amazon reported UK sales of £3.35bn, with pre-tax profits of £74m. These profits were officially earned by Amazon’s Luxembourg company which owns the inventory, bears the risk of losses and processes payments. As a consequence Amazon paid just £1.8m in UK corporation tax for that year.

If the present trends continue we are likely to see more High Street chains follow HMV and Blockbusters into obscurity and this whilst online competitors flourish.

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