My question comes after reading this article about Amazon paying just £15 million in tax for European revenues of over £9 billion.
Here, I am confused about when businesses pay VAT (VALUE ADDED TAX). From what I know, Amazon adds VAT when buying in United Kingdom, and I can definitely see it on receipts. Is Amazon not supposed to pay ~ 20% or £1.8 billions in VAT? Or can VAT be deducted?
Let's say we have a business that sells goods for £100 each, but the manufacturing/costs of production of these goods is £90/product, thus we earn £10 for each sale. Are we supposed to pay VAT on the £100 in sales and lose £10 for each product? Or are we supposed to pay 20% on the £10 that we earn on each product?