Amazon to stop accepting Visa credit cards from January 2022 – here’s all you need to know

gingercordial

IanManc said:

LaHostessAvecLaMostess said:

Amazon said employers' national insurance taxes accounted for the majority of the bill as it took on 22,000 more staff over the course of the last year.

Right, so the majority of their direct bill was Employers NI, which is 13.8%, but they paid a total tax of £1bn out of £20bn in sales, so about 5%.  Given that NI contributions are 13.8% and VAT is 20% (which dwarf their direct taxes) perhaps they've paid virtual nothing in some very key areas?  Perhaps corporation tax?

"As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there," said Labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.

"Therefore it's impossible to know what their true economic profit is," Prof Sikka said.

Given the profits declared by competitors, Prof Sikka said Amazon's tax bill "seems very low", whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.

"We need a complete change in accounting regulations which currently increase opacity rather than transparency," Prof Sikka added.

Professor of taxation law at King's College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.

"It seems that Amazon realised that they would need to pay a respectable amount - and, are hoping that an increase of £3.8 million sounds like a lot of money," Prof Mumford added.

Sounds about right.

I was responding to a comment that Amazon pay nothing on their profits, which wasn't true.

They paid £492million in direct taxes and if you add indirect taxes to that then the total tax contribution was £1.15billion, while Amazon's revenue from its operations in the UK that tax year was £20.63billion.

I didn't say that Amazon pay a fair amount, or enough, so you can quit with the sarcastic tone of your response.

You wondered whether Amazon paid "virtually nothing" in other taxes: "Perhaps corporation tax?". The answer is that only £18.3million in corporation tax was paid 2019/20 in the UK. That pretty much speaks for itself.

I actually had to do an analysis of Amazon's tax figures for work recently (I work in tax and my boss thought it would be interesting to do some digging into these as a comparison to our own business).  I won't bore everyone with the details, but just to say that the single company Amazon UK Services Ltd paid £18.3m in corporation tax in 2020.  That is only one company out of the bigger Amazon structure in the UK which has multiple companies.  It isn't the total amount of corporation tax that Amazon companies as a whole paid in the UK in 2020 - I don't have that figure as I couldn't be sure I had found all the legal entities, but it's much higher than that.

I have no other skin in the game re Amazon, Visa or whatever.

IanManc

Thanks @gingercordial that is interesting.  🙂

Grabs39

The incentive for getting their own card has gone up - just got a £40 gift card from them for getting their MasterCard (which I'll cancel in due course as I already have two other cards).

Within seconds of me signing the credit agreement, my default payment method has automatically switched from my Visa Credit card to their Mastercard. 

Plus they've then given me another £20 off for adding another card number.

I can certainly see them doing well out of this, but I'll try and make something of it too!

born_again

wild666 said:

Some people use their credit card only when they shop. Many credit cards are visa so that could cost amazon dearly in lost purchases and prime subscriptions. 

Are thehy?

Had a Mastercard credit card from Halifax for 10 as long as I can remember & Santander for 6 years.

Also Amazon credit card is provided by Newday who supply credit cards to many retailers.

LaHostessAvecLaMostess

IanManc said:

LaHostessAvecLaMostess said:

Amazon said employers' national insurance taxes accounted for the majority of the bill as it took on 22,000 more staff over the course of the last year.

Right, so the majority of their direct bill was Employers NI, which is 13.8%, but they paid a total tax of £1bn out of £20bn in sales, so about 5%.  Given that NI contributions are 13.8% and VAT is 20% (which dwarf their direct taxes) perhaps they've paid virtual nothing in some very key areas?  Perhaps corporation tax?

"As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there," said Labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.

"Therefore it's impossible to know what their true economic profit is," Prof Sikka said.

Given the profits declared by competitors, Prof Sikka said Amazon's tax bill "seems very low", whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.

"We need a complete change in accounting regulations which currently increase opacity rather than transparency," Prof Sikka added.

Professor of taxation law at King's College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.

"It seems that Amazon realised that they would need to pay a respectable amount - and, are hoping that an increase of £3.8 million sounds like a lot of money," Prof Mumford added.

Sounds about right.

I was responding to a comment that Amazon pay nothing on their profits, which wasn't true.

They paid £492million in direct taxes and if you add indirect taxes to that then the total tax contribution was £1.15billion, while Amazon's revenue from its operations in the UK that tax year was £20.63billion.

I didn't say that Amazon pay a fair amount, or enough, so you can quit with the sarcastic tone of your response.

You wondered whether Amazon paid "virtually nothing" in other taxes: "Perhaps corporation tax?". The answer is that only £18.3million in corporation tax was paid 2019/20 in the UK. That pretty much speaks for itself.

Which is clearly hyperbole.

When someone says "they pay nothing" they either mean they literally pay nothing or they might as well be paying nothing. The latter clearly applies to Amazon UK, who actually don't exist as a legal entity in the UK anyway, and pay far less tax than they should.

IanManc

LaHostessAvecLaMostess said:

IanManc said:

LaHostessAvecLaMostess said:

Amazon said employers' national insurance taxes accounted for the majority of the bill as it took on 22,000 more staff over the course of the last year.

Right, so the majority of their direct bill was Employers NI, which is 13.8%, but they paid a total tax of £1bn out of £20bn in sales, so about 5%.  Given that NI contributions are 13.8% and VAT is 20% (which dwarf their direct taxes) perhaps they've paid virtual nothing in some very key areas?  Perhaps corporation tax?

"As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there," said Labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.

"Therefore it's impossible to know what their true economic profit is," Prof Sikka said.

Given the profits declared by competitors, Prof Sikka said Amazon's tax bill "seems very low", whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.

"We need a complete change in accounting regulations which currently increase opacity rather than transparency," Prof Sikka added.

Professor of taxation law at King's College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.

"It seems that Amazon realised that they would need to pay a respectable amount - and, are hoping that an increase of £3.8 million sounds like a lot of money," Prof Mumford added.

Sounds about right.

I was responding to a comment that Amazon pay nothing on their profits, which wasn't true.

They paid £492million in direct taxes and if you add indirect taxes to that then the total tax contribution was £1.15billion, while Amazon's revenue from its operations in the UK that tax year was £20.63billion.

I didn't say that Amazon pay a fair amount, or enough, so you can quit with the sarcastic tone of your response.

You wondered whether Amazon paid "virtually nothing" in other taxes: "Perhaps corporation tax?". The answer is that only £18.3million in corporation tax was paid 2019/20 in the UK. That pretty much speaks for itself.

Which is clearly hyperbole.

When someone says "they pay nothing" they either mean they literally pay nothing or they might as well be paying nothing. The latter clearly applies to Amazon UK, who actually don't exist as a legal entity in the UK anyway, and pay far less tax than they should.

Here's the Companies House entry for Amazon UK Services Ltd, the company which paid the £18.3million corporation tax to to which I and other posters have referred, and which you say doesn't exist:

AMAZON UK SERVICES LTD. filing history - Find and update company information - GOV.UK (company-information.service.gov.uk) 

You obviously don't understand the meaning of "legal entity".

And as you have made it very clear you don't know what you're talking about I won't be engaging with any more of your ill informed baiting nonsense.

redux

Ectophile said:

But since Brexit, Luxembourg now counts as a foreign transaction.  So Visa charge extra transaction fees compared with a UK customer buying from a UK company.

The first part isn't true, and the second part is false reasoning.

As other people have pointed out, Amazon has trading companies in this country.

The EU regulated credit card fees down to a low percentage.

Since Brexit, our government hasn't seen fit to have similar restrictions as replacement, so credit card charges at wholesale level may increase.

gt94sss2

redux said:

Since Brexit, our government hasn't seen fit to have similar restrictions as replacement, so credit card charges at wholesale level may increase.

You are incorrect.

Regulation (EU) 2015/751 1 caps interchange fees at 0.3% for intra-EU card payments.

Following Brexit, the UK continues to cap interchange fees at 0.3% for intra-UK card payments (retaining the EU directive in UK law), but cannot regulate interchange fees charged in the EU.

As Amazon processes it's UK payments in  Luxembourg, this means that there’s no longer any cap on the interchange fees paid by Amazon for processing payments by UK-issued cards. Therefore Visa and MasterCard both increased interchange fees in the EU for accepting UK-issued cards, which it couldn’t do before Brexit. Amazon doesn’t want to pay the increased interchange fees.

Migster

The curious thing though is that Mastercard and Visa both increased their interchange rates as the transactions are now deemed to be cross-border (Mastercard did it first), but Amazon is only throwing its toys out of the pram with Visa.

JudgeDekker

Hopefully the global tax deal that's being discussed will see Amazon paying a greater percentage of UK sales in tax. I think the theory is it will but maybe there's a loophole they can exploit.