Amazon and its grocery arm Amazon Fresh could be hit with higher taxes as Chancellor Rachel Reeves looks to raise business rates for online tech giants in the October Budget next week.

The Chancellor is understood to be reviewing business rates and examining how much Amazon warehouses pay, compared to high street stores, in a move that could hit the online retailer with higher taxes, The Telegraph reported.

The speculation comes after the government announced plans to overhaul the business rate system, claiming that it “disincentivises investment, creates uncertainty and places an undue burden on our high streets”.

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This has been widely welcomed by leading voices in the grocery industry, with M&S chief executive Stuart Machin today (23 October) urging the government to fulfil its “bold ambitions” to overhaul business rates and give businesses flexibility over half of their apprenticeship levy funds.

However, the Chancellor’s review of the business rate system has intensified rumours that the Labour government could target online retailers’ warehouses, also used by the likes of Amazon for its grocery venture, Amazon Fresh.

Last month, the online retailer unveiled an £8bn investment in the UK over the next five years, but argued that it is one of the top 10 largest UK taxpayers.

It is not the first time that Amazon Fresh has been subject to close scrutiny, after it was threatened in July with a formal investigation from the Groceries Code Adjudicator as “many suppliers do not believe that [the firm] is complying with the Code.”