Amazon ordered to pay $294 million in back taxes

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Amazon has been ordered to pay 250 million euros, or $294 million, by the European Union (EU). The money owed is attributed to back taxes, as Amazon was given improper tax breaks.

After a three-year investigation, the EU’s European Commission, an enforcement branch, concluded that in 2003, Luxembourg had allowed Amazon to take assets from a subsidiary that was subject to taxation and move them to one that wasn’t.

“Luxembourg gave illegal tax benefits to Amazon,” Margrethe Vestager, the EU’s competition chief, said in a Wednesday statement. “As a result, almost three quarters of Amazon’s profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules.”

It’s illegal in the EU for member states to offer tax benefits to some corporations, which are not offered to others. Amazon denied receiving “special treatment” from Luxembourg. They insist they followed the law.

“We will study the Commission’s ruling and consider our legal options, including an appeal,” an Amazon spokesperson reportedly said. “Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us.”

The Amazon fine comes on the same day that the commission referred Ireland to court over allegations that it failed to collect back taxes from Apple. Apple was ordered to pay around $15.3-billion to the EU last year in back taxes due to Ireland.

Similar to the Amazon case, authorities at the time said Ireland had been giving Apple illegal tax breaks.

Members of Parliament (MP) in the UK have also accused Amazon of profiteering in a multi-billion-pound tax fraud. MPs on the Commons Public Accounts Committee accused Amazon of “turning a blind eye” to foreign firms that fail to pay value-added-tax (VAT). They cited organized criminals who are selling their goods cheaply on the internet, without paying VAT.

Companies which skirt the tax are guilty of VAT fraud, or tax evasion. If true, Amazon – which takes a commission from the total profit traders make – could be guilty of “profiteering” from the fraud.

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