The latest US tech company Amazon is caught up in a European Union crackdown on unfair tax deals. The EU reported that Amazon received “illegal tax benefits” in Luxembourg.
On Wednesday October 4th, Amazon was ordered to pay about 250 million Euros ($295 million) back to Luxembourg.
The EU competition commissioner, Margrethe Vestager said:
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed”. Vestager further added, “Member states cannot give selective tax benefits to multinational groups that are not available to others”.
The EU commission came to this conclusion after a three-year-long thorough investigation. They found that Luxembourg lowered the tax on Amazon without any valid justification.
Amazon stated, “We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international law”.
Vestager has taken a tough line on multinational companies regarding tax. Amazon is the latest one.
Earlier this year, Google was ordered to pay a massive €2.4 billion fine, for misusing its market dominance to give an advantage to its own shopping services. Google is fighting the fine and is likely to fail. The EU has also prepared several other anti-trust cases against Google.
The European Union commissioner is also investigating about the unusually low taxation of McDonald’s and GDF Suez in Luxembourg.
Vestager and the Commission continue to go after more tech companies that are taking advantage of EU countries with lax tax regulation. Last year they found that Apple had been given illegal tax benefits worth €13 billion by Ireland. But this doesn’t come as a surprise as a number of big companies look towards Ireland for establishing their European and international operations. Facebook is also one of those tax-avoiding companies.
Although Vestager has caught many US-based companies, she says that her approach is not based on foreign companies:
“This is about competition in Europe, no matter your flag, no matter your ownership”