Amazon Corporate

Amazon paid no corporate Taxation in Europe last year despite record Earnings income

The big picture: Amazon’s business is booming worldwide amid the fast adoption of online retail, so it shouldn’t be a surprise that its tax behavior is yet again under the lens of regulators in Europe and the US — its biggest markets. The company has been using various methods to reduce or altogether avoid paying…

The big picture: Amazon’s business is booming worldwide amid the quick adoption of online retail, therefore it shouldn’t be a surprise that its tax conduct is yet again under the lens of regulators from Europe and the US — its most important markets. The company has been using a variety of techniques to reduce or altogether avoid paying its fair share, but that could prove increasingly difficult soon.

Last month, Amazon reported greater than $8 billion in profit for the first three weeks of 2021, tripling its profits year over year. It is a financial image that is in stark contrast to that of many other businesses and businesses, which have endured or perhaps succumbed under the strain of lockdowns and accelerated changes in consumer habits over the previous twelve months.

The results are impressed investors and public investors, but the European Commission is not content with how companies like Amazon prevent corporate taxation via different methods. To that end, regulators are readying new tax proposals to be announced in the coming weeks and planned to stop fraud and tax avoidance.

In 2017, the Commission found that Luxembourg had provided Amazon no less than $250 million (a bit over $277 million at the time) in tax benefits between May 2006 and June 2014. It found this incentive unfair as it effectively allowed three-quarters of Amazon’s income for that period to go untaxed. The EU took the case to court, but a definitive ruling on the issue has yet to be reached.

However, in the context of new corporate filings in Luxembourg, public scrutiny on the company’s tax behavior is set to achieve new levels. After enjoying record sales income of over $44 billion 2020 ($52.9 billion) throughout its operations in Europe, the retail giant paid no tax. It obtained this break by shifting the money through its Amazon EU Sarl holding in Luxembourg, in which it reported a $1.2 billion ($1. 44 billion) loss. Amazon was even granted $56 million ($67.3 million) in tax credits it can use to lower future tax statements if it turns a profit.

In general, Amazon EU Sarl now has over $2.7 billion in accumulated losses it can use to offset any future tax burden. Additional considering the Luxembourg holding has 5,262 workers, Amazon has made revenues of $8.4 million ($9. 85 million) for every one of these for the 2020 fiscal year.

The retail giant claims that low margins and substantial investments contributed into the 2020 figures. A spokesperson told The Guardian that “corporate tax is based on profits, not revenues.” The rep noted that the company has invested”well over $78 billion in Europe since 2010, and much of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue, and supports small European firms.”

Meanwhile, the OECD is using the pandemic as a catalyst for international tax reform to protect against a tax-driven trade warfare. In the US, President Joe Biden blasted Amazon and 90 other businesses for not paying federal taxes and guaranteed to change that together with the statement of a $1.8 trillion plan to improve the country’s social safety net. Not all American companies agree with an increase in corporate taxation. But, Amazon is one of the notable exceptions, largely because it would have little effect on its bottom line while also financing infrastructure projects that will open opportunities for its small business.

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