Amazon is to get a £3.2m council tax rebate after winning a legal row about the nature and size of its warehouse.

Cannock Chase District Council warned the expected scale of the rebate to the online retail giant would “severely deplete” its funds.

Business rates on the Staffordshire site will be revised and back dated to 2011 after Amazon argued its mezzanine should not count as floor space.

Amazon also argued that its site should be reclassified as a basic warehouse.

Councillor Gordon Alcott, town centre regeneration boss, said Amazon had challenged the calculation of its business rates based on the amount of floor area the Rugeley warehouse occupied.

Amazon also claimed that as a fulfilment centre – which supplies goods directly to the customer – the site should be re-classified as a basic warehouse rather than a retail one, for the purposes of taxation.

“[This] means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops,” Mr Alcott said, adding that he felt sorry for town centres, because there was not a “level playing field”

Critics say the company, one of the richest in the world, should be paying higher not lower business rates.

The firm has the  amount of UK corporation tax it pays.

Council estimates also suggest Amazon’s ongoing liability will reduce from £1.7m to £1.25m annually, following the revaluation.

Stuart Richards, of union GMB West Midlands, said: “It looks like Amazon is happy to rely on our vital public services, but then pay as little as possible to actually support them.”

An Amazon spokesperson said: “Business rates are part of Amazon’s broader £18bn investment in the UK since 2010” adding that it had contributed £793m in total towards taxation in 2018.

An Amazon warehouse