Amazon and its grocery division, Amazon Fresh, are potentially facing increased taxes as Chancellor Rachel Reeves considers revising business rates for online tech giants in the impending October Budget.
The ongoing review by the Chancellor has raised concerns about the differing tax contributions between major online retailers and high street stores. Traditionally, these differences have sparked debate over the fairness and economic impact on physical retailers.
According to reports, the review could lead to a scenario where Amazon’s warehouses, used for both its main operations and Amazon Fresh, would incur higher business rates. This review aligns with the government’s recent proclamations to overhaul the business rate system. The system has been criticised for “disincentivising investment, creating uncertainty, and placing an undue burden on high streets”.
In light of these developments, prominent figures in the grocery sector, such as M&S Chief Executive Stuart Machin, have expressed hopes for a comprehensive overhaul that could offer businesses increased flexibility. These sentiments are particularly focused on the use of apprenticeship levy funds to stimulate further business growth.
These potential changes come at a time when Amazon has announced a substantial investment of £8 billion in the UK over the next five years. However, Amazon highlights its position as one of the top ten largest taxpayers in the UK, hinting at a need to carefully consider the implications of any tax adjustments.
Amazon Fresh has not been new to scrutiny. Just a few months prior, it faced the possibility of a formal investigation by the Groceries Code Adjudicator due to concerns from suppliers about compliance with established codes.
Therefore, the review of business rates might intensify the discourse on how online giants are taxed compared to their high street counterparts, influencing future government policies in the digital retail sector.
The forthcoming decision by the Chancellor will be closely watched, as it could significantly influence the landscape for online retailers and high street businesses alike, ultimately reshaping the competitive dynamics within the UK market.
