Daily Management Review

$295 Million In Luxembourg Back Taxes Ordered To Be Repaid By Amazon By EU


10/04/2017




In what is the latest U.S. tech company to be caught up in a European Union crackdown on unfair tax deals, Amazon was told to pay about 250 million euros ($295 million) in back taxes to Luxembourg.
 
The fine is only a fraction of the 13 billion euros that Apple Inc was ordered to pay to Ireland last year and was much lower than some sources close to the case had expected.
 
A tough line on multinational companies’ approach to tax has been adopted by EU Competition Commissioner Margrethe Vestager, who has other big U.S. tech companies in her sights.
 
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” Vestager said.
 
Amazon said it was considering an appeal.
 
“We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law,” Amazon said in a statement after the announcement.
 
There was little change in the shares of Amazon even after the announcement.
 
Vestager said that her approach was not biased against foreign companies even though the EU has taken on several U.S. tech companies, both in antitrust and in tax avoidance cases.
 
“This is about competition in Europe, no matter your flag, no matter you ownership,” Vestager said.
 
Aiming to close the loopholes used to reduce tax bills, a call for more integrated corporate tax regimes in Europe has been given by French President Emmanuel Macron which has been welcomed by her.
 
About a year ago there were speculations in the media that Amazon would be fined 400 million euros as this was being considered by Vestager, but the 250 million euros is significantly less than that amount even though the exact amount Amazon needs to repay is yet to be calculated.
 
Amazon shielded around 900 million euros in EU profits from tax, the Commission believes as suggested by the bill.
 
Making only $2.4 billion profit on global revenues of $136 billion in 2016, Amazon has worked on razor thin profit margins to fuel its global expansion for most of its existence.
 
Without paying tax, Amazon was allowed to channel a significant portion of its profits to a holding company by Luxembourg, the Commission said. Because the holding company held certain intellectual property rights, it was allowed to do this.
 
Setting up of a subsidiary in a country where profits of a company are not taxed and those that have unit license the intellectual property to other overseas affiliates, and then sell intellectual property, like brands or patents, to the subsidiary is an important way that companies use shift profits out of the United States, say tax advisers.
 
Also subject of a $1.5 billion court case with U.S. tax authorities, which Amazon won in March, was Amazon’s corporate set up with subsidies in Luxembourg.
 
One of the biggest employers in the country of half a million people is Amazon, which employs 1,500 in the grand duchy. It has a Europe-wide staff of some 50,000.
 
(Source:www.reuters.com) 






Science & Technology

With China Set To Dominate, 1 Billion Could Be Using 5G By 2023

Deutsche Telekom unveils next gen 5G mobile antennas in Europe

Diamonds are now the new gold

Expert Body Says Driving In A Driverless Car In An Inebriated Condition Or On Drugs Should Be Legalized

SEC’s EDGAR database vulnerable to cyber threats

Research Says The Risk Of Severe Turbulence On Planes Will Increase Due To Climate Change

Barclays and CLS Group aim to replace SWIFT with blockchain

Designing Of Cars Being Done With Hologram Goggles At Ford

The Already Surging Cyber Attacks Are Set To Rise Even Further, Says A Study

Chinese to equip smartphones with OLED displays

World Politics

World & Politics

Scholar Says Political Appointees Not As Important As Financial Ones In China For The Economy

An Expected Change In Brussels Could Be Crucial For The Euro Zone

Destroying People Who Wouldn't Help One Of His Bankrupt Businesses Was All Trump Talked About When He Met Him In 1990s: Branson

Russia Is Worried About America’s Unpredictability

No oil contracts with Iraqi Kurdistan: Iraq’s oil ministry

Donald Trump lost $ 600 million during his presidency

Britain puts its weight behind Europe in the battle between Boeing and Bombardier

EU hopes to keep the Iran nuclear deal afloat