EU puts an end to Amazon's tax evasion
The online retail giant Amazon.com has changed its tax practices for its European sales, according to a recent report in the Wall Street Journal. Specifically, it has started recording retail sales in each European country separately, instead of routing all of its sales through Luxembourg, which has low tax rates.
Due to tighter scrutiny of how large companies avoid taxes in Europe and America in recent years, the internet giant decided to make the change, which took effect on May 1, according to a senior company executive who told the newspaper. He said the company had begun preparations to diversify its retail sales structure two years ago, according to the Wall Street Journal.
In October, the European Union's antitrust authority began investigating Amazon's tax-cutting deal with Luxembourg. The European Union is focusing on whether Luxembourg violated its rules on state aid by striking a deal that allows Amazon to operate virtually tax-free in Europe.
The head of the European Union's antitrust authority stated in early May that,
The European Union will not meet the June deadline to make a decision on whether tax agreements between member states with Amazon and other companies, such as Apple and Starbucks, were legal, because they are still missing a lot of information.
Luxembourg has been under international scrutiny since November when media revelations emerged that detailed the role the European Union member state played in helping companies channel their profits through Luxembourg to pay low taxes instead of paying higher taxes in countries where the company made more sales. The so-called “LuxLeaks” scandal revealed leaked documents detailing the role the country played in helping companies shift profits through Luxembourg to pay lower taxes, rather than higher taxes in countries where the company made more sales.
