EU to continue Amazon investigation despite tax changes

The European Commission has said that it will push ahead with an investigation into Amazon’s past conduct in relation to tax, despite changes being announced by the multinational firm.

Amazon has come under fire in recent years for its tax affairs, with MPs blasting the firm – along with Google and Starbucks – for paying little tax in the UK by declaring profits through subsidiary companies in other countries.

But the complex tax structures within the company that enabled such practices are to be changes, it has announced. Despite the announcement, the European Commission has said that it will still pursue an investigation involving illegal sweetheart deals between Amazon and Luxemburg tax authorities.

Transactions across its European sales portfolio were previously declared in Luxemberg, which is renowned for its leniency with multinational companies and their tax arrangements.

Amazon has said that it will now declare profits in the countries that transactions are made, meaning that tax will be paid on profits in those countries.

The company said in a statement that it has been working on changes for over two years.

“More than two years ago, we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe.”

“As of 1 May, Amazon EU Sarl is recording retail sales made to customers through these branches in the UK, Germany, Spain and Italy.

“Previously, these retail sales were recorded in Luxembourg.”

The company also said that it was working on opening a branch in France.

Despite the announcement, the EU has said that it will pursue the investigation into tax affairs as part of a crackdown on multinational tax avoidance, saying that it will still focus on the company’s past conduct.

The EC’s competition spokesperson said, “These changes going forward do not affect the ongoing EU state aid investigation regarding the possible advantage that Amazon would potentially have received in the past through the tax ruling.”

Amazon paid around £10m in tax revenues last year, despise making around £4bn in the UK.

Image: Alan Levine via Flickr

Further reading:

MPs deem global companies’ tax avoidance as ‘an insult to British businesses’

The joy of tax

Google, Amazon, etc: blame tax laws, not the taxman or taxpayer

New Fair Tax Mark highlights responsible businesses

Aggressive tax avoidance keeps on hitting the headlines