Tuesday

15th Jun 2021

EU silent on Amazon's 'zero corporate tax' scandal

  • Amazon reported $8.1bn [€6.74bn] globally in quarterly net income - up 224 percent from the same period in the previous year (Photo: palomaleca)

The European Commission says it cannot comment on revelations that Amazon paid no corporate tax in Europe last year, despite recording more than €40bn in sales income there during the pandemic.

"I am not going to go into the details of these press articles," a commission spokesperson told reporters on Tuesday (4 May), when pressed.

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Instead, he said the commission has a "very positive and ambitious agenda" on taxation, noting they will soon publish a communication on the issue.

The muted response follows details, published by the Guardian newspaper, that the US giant declared a total of €44bn in sales income in Europe for 2020.

But corporate tax filings in Luxembourg revealed it had paid no corporation tax, during a time when the firm is making record sales given the pandemic, with its public lockdowns and temporary closure of many European high-street shops.

The tech giant reported $8.1bn in global net income for the first quarter of this year alone. That comes against a backdrop of sporadic strikes across Europe by employees citing poor labour conditions and weak coronavirus safety measures.

The commission, back in 2017, demanded Luxembourg pay back €250m of state aid given to Amazon.

However, that case dealt with a decade-old tax arrangement in Luxembourg.

Meanwhile, the US giant has since been able to find a new arrangement whereby its Luxembourg unit managed a loss of €1.2bn, even leading to some tax credits.

It is not immediately clear how it managed a €1.2bn loss.

But past schemes allowed corporations to use royalty payments to avoid having to pay taxes later on.

"You pay yourself for the right to use your knowledge," said Tove Maria Ryding, a tax expert at the Brussels-based NGO, Eurodad.

She explained that firms in Luxembourg are also able to lodge several legal entities.

One entity runs the business end, while another holds the money. Structures are then designed to make sure that the entity that holds the money is not tax liable, she said.

"There are still ways of designing corporate tax structures to make them disappear from the tax system," she said.

The latest revelation comes amid on-going internal discussions on an EU tax transparency bill.

Also known as country-by-country reporting, the proposed directive seeks to reveal where a corporation is doing business and how much it is being taxed.

Ryding said member states and the European Commission are watering it down by limiting the number of countries covered by the bill.

"It would be 'partial' country-by-country reporting, and it would leave huge black areas on the map," she said.

US president Joe Biden, meanwhile, is also pressing for a global corporate tax rate, set at 21 percent.

But Biden wants to limit it to 100 global giants, based on a firm's profitability, while protecting US digital firms.

It also means Amazon could possibly get off the hook, said Ryding. "Their profit margins are relatively low, so it might be that Amazon will fall out of the category," she said.

For its part, Amazon has denied any wrongdoing.

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