EU cracks tax whip, demands Amazon pay up

AmazonAmazon has been told to pay about €250 million (A$374 million) in back taxes to Luxembourg, the latest US tech company to be caught up in a European Union crackdown on unfair tax deals.

The fine was much lower than some sources close to the case had expected and is only a fraction of the €13 billion that Apple Inc was ordered to pay to Ireland last year.

EU Competition Commissioner Margrethe Vestager, who has other big US tech companies in her sights, has taken a tough line on multinational companies’ approach to tax.

Amazon said it was considering an appeal.

Amazon shares were little changed in early Wednesday trading.

While the exact amount Amazon needs to repay is yet to be calculated, the €250 million is significantly less than the 400 million euros which sources close to the matter told Reuters a year ago was under consideration by Vestager.

The bill suggests the Commission believes Amazon shielded around 900 million euros in EU profits from tax, calculations by Reuters show.

For most of its existence, Amazon has worked on razor thin profit margins to fuel its global expansion, making only US$2.4 billion (A$3.1 billion) profit on global revenues of US$136 billion in 2016.

The Commission said Luxembourg allowed Amazon to channel a significant portion of its profits to a holding company without paying tax.

Amazon’s corporate set up with subsidies in Luxembourg was also subject of a US$1.5 billion court case with US tax authorities, which Amazon won in March.

Amazon, which employs 1500 in the grand duchy, is one of the biggest employers in the country of half a million people. It has a Europe-wide staff of some 50,000.

Luxembourg, whose tiny economy has benefited from providing a European base for multinational companies, rejected the finding and said it was looking at its legal options.

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