Support 100 years of independent journalism.

  1. Business
  2. Economics
8 June 2021

Amazon’s profits have soared – but its tax bill hasn’t

Despite generating almost $45bn in profits between 2018 and 2020, Amazon paid just $1.9bn in US federal income tax.

By Aisha Majid

Despite generating almost $45bn in profits globally between 2018 and 2020, Amazon paid just $1.9bn in US federal income tax in the same period. 

Analysis of the company’s filings by the Institute on Taxation and Economic Policy shows that the tech giant’s effective federal tax rate in this period was just 4 per cent. In 2018 the company paid no federal income tax in the US, which is its largest market by far. 

Amazon’s profits have surged, but its tax bill remains low
Global profits and US federal tax ($bn)

Institute on Taxation and Economic Policy; company filings

Last weekend G7 finance ministers agreed a landmark deal under which the world’s largest companies, including Google and Facebook, would pay more tax in markets where they make large sales. At present, tech companies that sell services remotely can book profits in low-tax jurisdictions to minimise their tax bill. 

A second pillar of the agreement, if ratified, would set an unprecedented minimum global corporate tax rate of at least 15 per cent.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A weekly round-up of The New Statesman's climate, environment and sustainability content. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

Although the specifics of the agreement are still being determined, there is concern that Amazon could avoid having to pay more tax in countries where it does business. According to the G7 communiqué, countries “would be awarded taxing rights on at least 20 per cent of profit exceeding a 10 per cent margin for the largest and most profitable multinational enterprises”. 

Amazon’s profit margin, which reached a record 7.5 per cent in the first quarter of this year, has consistently fallen below this level. But its lucrative cloud-computing division, Amazon Web Services, generated an operating margin of 30 per cent in 2020.