BREAKING NEWS: Amazon Hit With $421M Tax Bill Even Before They Launch In OZ
Amazon who thought they may get an easy ride, in Australia when it came to tax may want to rethink their strategy after the EU ordered the big US retailer to repay $421M in back taxes.
Several big US technology Corporations in Australia including Google, Microsoft and Apple were exposed this year using tax havens in Ireland and Luxembourg to minimise their taxes in Australia.
The EU said the online giant had been allowed to pay “substantially less tax than other businesses as a result”.
“This is illegal under EU state aid rules,” the European Commission said.
Meanwhile, the Commission said it planned to take Ireland to court over its failure to collect €13bn of back taxes from Apple.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon’s profits were not taxed,” European Competition Commissioner Margrethe Vestager said in a statement.
Ms Vestager said the Luxembourg benefits meant that Amazon paid four times less tax than other local companies.
“Member states cannot give selective tax benefits to multinational groups that are not available to others,” she added.
The decision follows a three-year long investigation by the European Commission.
The tax deal between Luxembourg and Amazon was struck in 2003.
At the time, Jean-Claude Juncker, the European Commission’s president, was the prime minister of Luxembourg.
The $421M is less than an estimate of $650M last year.
The commission’s recovery order could rekindle transatlantic tensions over Europe’s tax clampdown, just as Washington considers White House tax reforms that pave the way for US multinationals to repatriate foreign profits.
US business and Congress reacted with anger to the Apple decision last year, warning it could threaten to undermine foreign investment and potentially prompt retaliation.
Tim Cook, Apple’s chief executive, described the commission’s case as “total political crap”. Margrethe Vestager, the EU competition commission, will on Wednesday challenge a 2003 tax ruling underpinning Amazon’s European business that allegedly permitted it to improperly cut European profits by paying intergroup royalties shielded from taxes.
The European Commission’s move, confirmed by several people familiar with the case, comes on the heels of Apple’s record €13bn bill for Irish back taxes last year, which prompted a fierce political backlash from Washington.
Launched almost three years ago, the commission’s investigation alleged that the US online retailer benefited from a sweetheart tax deal that granted it almost a decade of illegal state support from Luxembourg, the hub for its European operations.
Luxembourg and Amazon have long denied any wrongdoing.
The case against Amazon is the fourth of about half a dozen tax probes launched by the commission since 2013. Decisions have been taken against Apple in Ireland, Starbucks in the Netherlands, and Amazon and Fiat in Luxembourg, while Belgium separately was required to recover tax from about 35 companies benefiting from an illicit scheme.
Investigators are also nearing the end of inquiries into McDonald’s, the fast-food chain.
The commission’s move on Amazon could prove awkward for Jean-Claude Juncker, its current president, who was prime minister of the Grand Duchy from 1995 to 2013.