Amazon’s tax set up comes under further scrutinyFebruary 2015
The online retailer Amazon, already accused of avoiding UK tax payments by administering its business from Luxembourg, is now being told its arrangements amount to a vehicle for receiving state aid.
The European Commission has compiled a report doubting whether Luxembourg had properly examined Amazon’s practice of moving money between subsidiaries for tax advantages and suggesting it may not have assessed whether the company’s tax regime was in line with market conditions.
The report even asked whether Amazon exaggerated the size of the royalties that passed between the various parts of its operation.
The Commission stated in October that manoeuvring money had saved Amazon billions of dollars during the past decade.
For its part Luxembourg gave itself powers to make tax calculations that would not comply with international guidelines, said the report – and Amazon’s savings therefore represented state aid.
Amazon countered that it had received “no special tax treatment from Luxembourg”. The company said: “We are subject to the same tax laws as other companies operating here [in Luxembourg].”
The country’s finance ministry issued a similar denial: “Luxembourg is confident that the state aid allegations in this case are without merit and will be able to convince the Commission of the legitimacy of the anticipatory decision in question and that no competitive advantage was granted.”
In 2013 Labour MP Margaret Hodge, as chair of the UK parliament’s public accounts committee, urged consumers to boycott Amazon over its tax activities.
Professor Crawford Spence, of Warwick Business School, who researches tax avoidance, protested: “Luxembourg has long operated as a de facto tax haven within the internal market, effectively depriving other EU governments, and the EU in general, of significant tax revenues.
“There is a simple way to put an end to those sorts of scandals – harmonise tax rules across EU member states.”
Separately the Commission is investigating Luxembourg over suspicions of unusually favourable tax deals offered to Fiat’s financing arm, and is scrutinising the Irish Republic’s tax agreement with Apple and the Netherlands’ relationship with Starbucks in a crackdown on multinationals’ avoidance schemes.
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