Online retailer yet to decide whether Shoreditch development will become UK corporate headquarters or offices it has nearby

Amazon is quitting its UK base of 16 years in Slough and moving to a 15-storey corporate office on the outskirts of the City of London.

The 600,000 sq ft building, known as Principal Place, will be just north of Liverpool Street station. It will have a new public piazza and the plans show space for a swimming pool, tennis court and basketball court on the roof terrace.

Amazon's UK operations started in Slough in 1998 but they have expanded rapidly since. Beyond its network of British warehouses, the UK business employs 1,700 people in corporate functions, mostly spread between Slough and a 12-storey office building in Farringdon, central London that opened last year. The group has not yet decided whether Shoreditch or Farringdon will be its new UK HQ.

All staff will switch to central London next year and by 2017 many will be transferring to Shoreditch. Amazon said the new building will provide it with "total capacity" for more than 5,000 London employees.

The moves will not affect arrangements through which Amazon is allowed to designate $7bn (£4.3bn) in UK sales as made by a company in Luxembourg.

A CGI image of Principal Place, which Amazon says will provide the retailer with 'total capacity' for more than 5,000 London employees.

By contrast, Amazon's UK business reported sales of just £449m last year, paying £4.2m in tax on pretax profits of £17m..

In May, Margaret Hodge, the chair of the public accounts committee, said she thought the arrangements meant Amazon was not paying its fair share of tax. "They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere," the Labour MP said.

Google, which books its UK sales in an Irish subsidiary, is also planning a large new office in London, near King's Cross station.

The mayor of London, Boris Johnson, said: "Our city is the perfect home for top tech talent and I am very pleased that Amazon have confirmed their intention to create thousands of jobs at a major new base in east London. "

Christopher North, managing director of Amazon's head of UK operations, said: "We have already invested well over £1bn and created more than 7,000 permanent jobs across the UK.

Christopher North, UK boss of Amazon. Photograph: Linda Nylind for the Guardian

"To support our continued growth in the UK, we have secured this exceptional building giving us the capacity to hire thousands of new employees in London in the coming years, in addition to the thousands of permanent roles we will create across our UK fulfilment and customer service centres."

Construction will start later this month and Amazon will take the keys for 431,000 sq ft of office space in 2017.

Confusingly, Amazon's UK business is called Amazon.co.uk Limited even though it does not own or operate the website of the same name. Instead the UK business operates Amazon's British warehouses, buying teams and other functions. It sells these services to sister Amazon companies overseas, mainly Amazon EU Sarl, the European headquarters company.

UK boss Christopher North has claimed that the corporate structure of Amazon is not tax-driven and insisted the European business could not function were it required to be split up country-by-country.