Amazon’s Luxembourg tax arrangement under scanner

E-commerce

by CBR Staff Writer| 04 July 2014

European Competition Commission has requested Luxembourg to provide more information on the corporate tax affairs.

The European Competition Commission has sent a letter to Luxembourg's government to provide the documents related to Amazon's tax arrangement in the country.

The commission has requested Luxembourg to provide more information on the corporate tax affairs in the country, where the firm's main European operating company is located, to ascertain whether they conform to the state aid rules.

An unnamed EU official told Financial Times, "We are looking into what kind of arrangement Luxembourg has with Amazon."

The European Commission has already launched an investigation into the tax arrangements of Apple in Ireland.

The commission is probing whether the companies have struck sweeter deal in the countries contravening the state aid rules.

The commission will be probing how the countries levy taxes on companies as they allegedly shift their profit to lower tax havens through networks of subsidiaries to avoid higher taxes elsewhere.

The probes centre on the way authorities in these three countries apply their tax laws to the global giants' transfer pricing arrangements as they funnelled profits through networks of subsidiaries to avoid higher rates of corporation tax.

The request for information is said to be the first step from the commission which could lead to a full investigation.

Google was twice probed in 2012 by a parliamentary committee over its tax practises, as it paid a tax rate of 2.6% on $8.1bn in non-US income during the year, after channelling all its foreign earnings to its Bermuda-based affiliate.

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