Amazon Has Received $4.7 Billion in Subsidies Globally, Watchdog Says

The report highlights how little is known about the cost of Amazon’s expansion to taxpayers around the planet.

Feb 9 2022, 12:00pm
On the Clock is Motherboard's reporting on the organized labor movement, gig work, automation, and the future of work.

Amazon has received at least $4.7 billion in tax breaks globally during the past 10 years for warehouses, data centers, offices, call centers, and film production projects, according to a new report by a watchdog group and a global labor federation. 

While the vast majority of these tax breaks—$4.1 billion—are for projects in the United States, the new report tallies, for the first time, subsidies Amazon has received beyond US borders, where Amazon has aggressively built out its Amazon Prime and data center network in recent years. 

Advertisement

Among the $600 million in tax breaks received beyond the US borders are $15.6 million for an Amazon warehouse in Leipzig, Germany; $10.44 million for a Amazon warehouse in Fife, Scotland; $5.1 million for a warehouse in Asturias, Spain; $1.3 million for a warehouse near Lyon, France; $2.3 million for a call center in Edinburgh, Scotland; roughly $262 million for an Amazon Web Services data center in Montreal, Quebec; and roughly $180 million for an Amazon Web Services data center in Sao Paulo, Brazil. 

But that $600 million is only the tip of the iceberg of Amazon’s tax breaks outside of the United States, the authors of the new report say. The authors identified 407 Amazon facilities in 13 countries “where evidence exists or there is reason to believe that Amazon has received public monies for its projects,” where full data is not available because of weak disclosure laws and practices. 

“Because of poor disclosure practices in these countries, the costs of most such deals are hidden: the total is undoubtedly significantly higher,” the researchers write. Among the countries where the report’s authors found evidence or “reasons to believe” that Amazon has received subsidies from governments are Argentina, Bahrain, Brazil, Canada, Chile, China, France, India, Mexico, New Zealand, Poland, South Africa, Spain, and the United Kingdom.

Advertisement

The new report, "Amazon.com’s Hidden Worldwide Subsidies," was compiled by Good Jobs First, a non-profit watchdog that researches corporate subsidies, and UNI Global Union, a global union federation that represents 20 million workers around the world. More than anything, it points to how little is known about the cost of Amazon’s overseas expansion to foreign taxpayers. Researchers who compiled the report, published on Wednesday, used data from public records, investor reports, and company statements to identify subsidies.

“This is an intentionally misleading report from a self-interested organization. Communities around the world design economic development programs to help create local jobs and investment, and Amazon is proud to work with these communities to do just that. We created more than 300,000 jobs globally last year, and over the last decade we’ve contributed over $1 trillion to the economy in the U.S. alone,” an Amazon spokesperson said. Of the trillion, the spokesperson added that $530 billion are direct investments and $500 billion indirect value-added.

Since 2001, Good Jobs First’s Amazon Tracker has been tallying subsidies received by the e-commerce giant and its subsidiaries in the United States, the vast majority of which have gone to warehouse distribution centers. Their list also includes subsidies received by Whole Foods, Zappos, and Audible. Many of these are gifts from local and state governments. 

Advertisement

“The problem [with these tax breaks] is that they aren’t a very efficient use of the public’s money,” said Kenneth Thomas, the report’s lead researcher. “Amazon could easily pay for these projects themselves, they have billions and billions of dollars, but instead they use their leverage to get the government to pay for part of the project when that money could be put into education, healthcare, or infrastructure.”

While cities, particularly in areas desperate for jobs, often use tax breaks to lure big companies like Amazon to set up shop, researchers say that this process displaces smaller companies and hurts the taxpayers who are often desperately in need of other public resources. 

The tax-energy exemptions that Amazon Web Services, the company’s cloud computing arm, has received for opening data centers are likely the largest tax breaks Amazon gets from governments, but they are also often the most shrouded in secrecy. “As badly disclosed as Amazon’s warehouse subsidies are, its data center incentives are even more opaque,” the report’s authors write, noting that this is because the largest subsidies are “electricity discounts and utility tax exemptions, which typically become perpetual entitlements once awarded.”

Amazon was founded on a business model designed to avoid paying taxes. In 1994, Jeff Bezos selected Washington state as the place to set up his online bookstore, specifically because the state does not have sales taxes. In 2012, the company began pursuing tax abatements around the country, creating an office within its public policy department that specializes in winning tax subsidies. Since then, the report’s authors write Amazon has viewed the selection of the sites for its warehouses as “rent-seeking,” “generating profits based on political activity, rather than by becoming more efficient.”

Advertisement

In recent years, Amazon has become more sophisticated about keeping the value of the incentives it receives from governments throughout the years a secret, the report also says. And many of Amazon’s subsidy packages in the United States have also remained under wraps. “Consistent with its recent, more-secretive history in the U.S., in other nations, the company does not voluntarily announce the value of the incentives it has qualified for or negotiated,” the report’s authors write. “Unfortunately, most governments acquiesce in this corporate secrecy.” During the bid for Amazon’s second headquarters, HQ2, Amazon required many of its 233 bidders to sign NDAs. 

In countries with weak reporting requirements, this lack of transparency is even worse than the United States. For example, Mexico has 10 fulfillment centers and 27 delivery stations, and multiple sources told the report’s authors that Amazon’s warehouses in Mexico have routinely received support from the Mexican government, but public records requests filed more than a year ago in the Mexican states where Amazon operates produced no results. In Ireland, Amazon received subsidies for a data and customer support facility, but in both instances, the country’s investment promotion agency refused to disclose the amounts of the awards. 

Amazon also frequently hides its negotiations for the approval of subsidies until the last minute, researchers say, hiding behind code names, subsidiaries, and limited liability companies, LLCs. In Asturias, Spain, Amazon obtained a confidentiality agreement to negotiate subsidies for a warehouse last year. When Amazon negotiated with New Zealand for a subsidy for the production of the TV series “Lord of the Rings” in 2019, the government resisted public records requests for documentation of the negotiations. 

The researchers also found that Amazon pursues even very small subsidies when it can. “We learned from a confidential source the amounts of two subsidies Amazon received in the European Union that were too small to notify at the time of investment: $2.3 million for a call center in Edinburgh, and $1.3 million for a $51.4 million…warehouse near Lyon, France,” the report’s authors wrote. “These small amounts…indicate that Amazon pursues any subsidies it is eligible for, no matter the size.” 

The report’s authors argue that governments should stop giving state aid to Amazon, which is intended to “help companies grow their operations in areas they otherwise wouldn’t.” They also say that countries should be required to disclose the names of the entities that receive subsidies and the value of these awards, and governments and utilities should disclose the value of all electricity discounts and tax exemptions they receive for their data facilities. 

Elsewhere, communities across the United States and world are pushing back against Amazon’s expansion into their communities. In September, Motherboard reported that communities had declared victories in Colorado, California, and Indiana this summer, getting local governments to block warehouse subsidies and Amazon to abandon warehouse plans. Last year, indigenous groups in South Africa protested Amazon’s plans to build a sprawling new headquarters, known as River Club, in Cape Town. 

Tagged:

On the Clock, worldnews

More
like this
'I'm Drowning:' Amazon Contractors Are Paying the Price for the Labor Shortage
Warren, Sanders Demand Investigation into Amazon’s Attendance Policy
‘I Had Nothing to My Name’: Amazon Delivery Companies Are Being Crushed by Debt
Amazon Labor Union Loses Vote Next Door to Their First Victory
San Francisco Proposes Moratorium on New Amazon Delivery Stations
Hundreds of Amazon Employees Are Out on COVID Leave at a Single Warehouse
Amazon’s Abortion Travel Benefit Doesn’t Include Its Most Vulnerable Workers
Amazon Labor Union Is Inspiring Amazon Workers Around the Country to Unionize