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Is Amazon Set To Pay Minimalistic Taxes, Just Like They Do In Europe?

Amazon’s business in Australia is being managed by the Amazon Europe team according to sources, this is the same division that only managed to pay A$244M tax on A$32B dollars revenue despite operating in Europe for seven years.

The lack of tax has reignited the debate over US tech firms minimising the tax they pay in Europe by using cross-border arrangements.

At this stage, it’s not known how Amazon will structure their taxes in Australia. An Amazon spokesman said: “Amazon pays all the taxes that are required in every country where we operate.

Amazon Europe is based in Luxembourg, where the online retailer aggregates the sales it makes from countries across the Continent, what’s not known is whether the Australian operation will be a subsidiary of Amazon Europe. If so the US retailer will be able to minimise taxes in Australia significantly.

Amazon.com Inc. logos are displayed on laptop computers in Washington, D.C., U.S., on Wednesday, Oct. 23, 2013. Amazon.com Inc. is scheduled to release third-quarter earnings on Oct. 24. Photographer: Andrew Harrer/Bloomberg via Getty Images

In Europe Amazon recently reported a pre-tax profit of €59.6m (£54m) last year, meaning it had a tax bill of just €16.5m (£14.95m).

“We operate a pan-European business from our headquarters in Luxembourg where we have over 1,500 employees and growing, including our senior leadership team.

“We’ve invested over €20bn in Europe since 2010, and expect to hire 15,000 new employees this year, bringing our total permanent European workforce to over 65,000 people.”

Retail Week in the UK reported that the company’s warehouse and logistics business, Amazon UK Services, paid a corporation tax bill on £7.4m in 2016 – down from £15.8m the previous year.

That division grew revenue from £946m to £1.46bn during the year, but pre-tax profits halved from £48m in 2015 to £24m last year.

For accounting purposes, Amazon Services UK files its turnover as a charge to its parent company for delivering the products it sells.

Revenue from Amazon’s UK retail sales are reported via a separate company based in Luxembourg, but filings in the US suggest its revenues in Britain hit £7.3bn in 2016.

Back in 2015, Amazon said it would put an end to the practice of using corporate structures that divert sales and profits away from the UK.

“It will be interesting to see how they kick off in Australia and whether they actually pay taxes” said a Harvey Norman executive.

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