EU orders Luxembourg to recoup USD 294 million from Amazon in back taxes

The European Union (EU) has ordered the world’s renowned e-commerce giant, Amazon, Inc., to pay back unpaid taxes amounting to USD 294 million (approximately EUR 250 million) to Luxembourg, that the company has apparently exhorted from the region. The competition commissioner of EU, Margrethe Vestager has stated that close to 75% of Amazon’s profits have not been taxed by Luxembourg under the agreement between the Duchy and the company in between 2003 and 2011. 

In 2014, the taxation fraud in Luxemburg had been revealed in generality, that also brought forth the claim that many large accounting organizations helped multinational firms to pay zero to a minuscule amount of tax. With regards to the unpaid taxes, the President of the European Commission, Jean-Claude Juncker, who also, for the record, had been the Prime Minister as well as the Finance Minister of Luxembourg at the time of suspected deal, had been severely criticized for his plausible role in enabling unaccountable tax deals.

As of now, Amazon has denied EU’s notice on the pay back of taxes, stating that the company has paid all the taxes in accordance with the International and the Luxembourg tax law. On the other hand, the Commission claims that Luxembourg has permitted Amazon to channel a massive portion of its profits to a holding firm without paying taxes. The exact amount of tax yet to be reclaimed as the Luxembourg authorities are still under the process of calculating the amount. EU’s antitrust chief, Margrethe Vestager, has also categorically stated that under the EU State aid norms, member states are denied permission to provide selective tax benefits to any multinational company.

The European Union has been suspected for targeting US-based companies in the competition investigation. Speaking along same lines, recently, the Commission fined Facebook with a EUR 110 million charge over its acquisition of WhatsApp in 2013. In June, the organization levied EUR 2.4 billion on Google, owing to its mistreatment in research monopoly. Favoring these moves, Vestager claims that the entire matter focuses on the competition in Europe, company ownerships notwithstanding.

EU is also scrutinizing Luxembourg related to the tax deals with the French energy company Engie and the giants in the fast food chain McDonalds. Luxembourg has also raised its voice against a ruling in 2015 that Fiat, one of the noteworthy players in automotive market, has to pay back its unpaid taxes. Apart from Luxembourg, the EU commission is also planning to scrutinize the taxation across Netherlands, Ireland, and Belgium.

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Sunil Hebbalkar

Sunil develops content for Market Size Forecasters. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development department before switching his professional genre. Following his technical writing skills, he ...

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