Amazon Paid No Corporate Tax to Luxembourg

Amazon had a record-breaking year in Europe in 2020, as the online giant took in revenue of 44 billion euros while people were shopping from home during the pandemic. But the company ended up paying no corporate tax to Luxembourg, where the company has its European headquarters.

The company’s European retail division reported a loss of €1.2 billion ($1.4 billion) to Luxembourg authorities, according to a recent financial filing, making it exempt from corporate taxes. The loss, which was in part because of discounts, advertising and the cost of hiring new employees, also meant the company received €56 million in tax credits that it could use to offset future tax bills when it makes a profit, according to the filing, released in March.

Amazon was in compliance with Luxembourg’s regulations, and it pays taxes to other European countries on profits it makes on its retail operations and other parts of the business, like its fulfillment centers and its cloud computing services.

But the filing will likely provide fresh ammunition for European policymakers who have long tried to force American tech giants to pay more taxes. And it comes as the Biden administration is pushing for changes in global tax policy, as part of a broader effort to raise taxes on large corporations, which have long used complicated maneuvers to avoid or reduce their tax obligations, including by shifting profits to lower-tax countries, like Luxembourg, Ireland, Bermuda and the Cayman Islands.

President Biden has said that he was aiming to raise as much as $2.5 trillion over 15 years through measures such as increasing corporate tax rates to 28 percent from 21 percent and imposing a minimum tax on global profits.

Already, France has levied a 3 percent tax on revenue from digital services provided within the country, an effort to wring some revenue from internet companies — a tax that Amazon says it is paying — but broader European Union-wide policies have been thwarted by opposition from Washington.

In its filing, covering 2020, Amazon avoids paying Luxembourg’s corporate tax, which is a tax on profit. In 2020, Amazon’s overall international segment reported operating profit of $717 million. And in the first three months of this year, the entire company’s profit soared to $8.1 billion, an increase of 220 percent from the same period last year. Amazon’s first-quarter filings, released last week, also showed that it made $108.5 billion in sales, up 44 percent, as more customers made purchases online because of the pandemic.

The company’s filing with Luxembourg was first reported by The Guardian.

A spokesman for Amazon, Conor Sweeney, said the company paid all taxes required in every country in which it operates.

“Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business,” he said.

Sahred From Source link Business

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