According to a report by the Financial Times published yesterday, the EU’s
Competition Commission has asked Luxembourg to hand over documents relating to
US online retailer Amazon’s corporate tax affairs in the country. The request
for information will establish whether or not the company’s tax affairs through
Luxembourg comply with applicable state aid regulations. The outcome of the
fact-finding mission could ultimately lead to a full investigation being carried
out.
An EU official told the Financial Times that, ‘We are looking into what
kind of arrangement Luxembourg has with Amazon’. If the Competition Commission
unearths evidence of unlawful operations between Luxembourg and Amazon, it will
have the discretion to order the repayment of all tax revenues that have been
lost as a result of the arrangement.
Within the UK, Amazon faced a torrent of criticism earlier this year
when accounts revealed that in 2013 the company paid just £4.2 million in tax
to the UK Treasury, despite achieving record sales of £4.3 billion. At the time, a representative from Amazon
stated, ‘The company pays all applicable taxes in every jurisdiction that it
operates within’. Prior to this, in November 2012, Amazon, Google and Starbucks
were quizzed by the UK Public Accounts Select Committee over their controversial
tax arrangements and were branded ‘immoral’ by the MPs questioning them. In
2011, Amazon had made over £3.3 billion in sales across the UK, but paid no
corporation tax and in over 14 years of trading in the UK, Starbucks had paid
just £8.6 million in corporation tax.
The request for information marks another step in a broader EU crackdown
against large multi-nationals channelling money via ‘tax-havens’ and concluding
‘sweetheart’ deals with certain countries. Last month, the EU launched
investigations into Apple, Starbucks and Fiat to establish whether the deals
they had struck with authorities in Ireland, the Netherlands and Luxembourg
breach state aid rules.
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