Amazon received €294m (£258m) in tax credits last year that it can deduct from future bills for its European business, as revenues at the online retailer rose significantly to €32bn. The company said it received the tax credits because it made a loss last year due to its investment programme and the highly competitive retail environment across Europe and the UK. Amazon Europe made a pre-tax loss of €983m, before taking into account the tax credit, while revenues rose 15% year on year to €32bn. The company paid out €166.6m in licence and royalty payments, partly to affiliated businesses. Tax campaigners suggest such payments help reduce profits and tax payments in particular territories. “Amazon pays all the taxes required in every country where we operate,” said a spokesman for the company. “Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business.” The company, which is being pursued by the European commission for more than €250m over what it has described as “illegal tax advantages” in Luxembourg, says it is continuing to “defend itself vigorously” against the claim. EU legislators got tough after years of relatively low tax payments by the US-based tech firm. In 2018, Amazon received €241m in tax credits on European revenues of €28bn. In 2017, Amazon paid €55m in tax on European revenues of €24.9bn, and €16.5m on revenues of €21.6bn in 2016. “Big companies can use clever accounting techniques, such as paying royalties to tax havens, to slash the amount they pay in tax,” said Robert Palmer, the executive director of Tax Justice UK. “This is particularly galling right now when we’re all being asked to do our bit. Politicians need to step up and fix the way we tax corporate profits.” The UK government has set out plans to impose a 2% digital services tax on the UK revenues – not just profits – of online companies including Google, Facebook and Amazon to address the issue. Amazon said it was investing billions and helping to create many jobs across Europe. “We’ve invested well over €55bn in Europe since 2010, and much of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue, and supports small European firms with programmes like Fulfilment by Amazon [where the company will store and ship goods for other firms],” said the spokesman. “We now have 48 fulfilment centres, 100 corporate offices and development centres, and over 95,000 full-time employees across Europe. And there are over 100,000 EU-based sellers using our services to reach new customers and grow their businesses.”