Amazon Starts European Corporate Tax Payments

The tax practices of Amazon in Europe that raised so much ire and controversy could  finally be coming to an end.

This follows reports today that the e-commerce giant has finally begun paying corporation tax in a number of European countries.

Corporation Tax

According to the Wall Street Journal, Amazon has from 1 May begun paying direct taxes on sales in the UK, Germany, Italy and Spain.

Today’s announcement follows years of controversery concerning the corporate tax affairs of Amazon and a number of other tech companies.

For years Amazon was able to avoid paying UK corporation tax on is profits because its sales are accounted at its European headquarters in Luxembourg. Last October, the European Union (EU), launched an investigation to determine whether a tax agreement with Luxembourg signed in 2003 breaks EU competition rules.

However in 2012, the company was investigated by HM Revenue and Customs (HMRC) following the revelation that it paid no corporation tax in the UK, despite the fact that it made for example £2.9 billion in sales for 2011 in the UK alone.

And Amazon also faces another challenge in the UK in the form of the tax clampdown by Chancellor George Osborne. The new diverted profits tax (nicknamed the Google Tax) came into law from April, and it imposes a punitive 25 percent tax on groups deemed to be artificially routing profits overseas. A number of other European countries are thought to be considering copying Osborne’s diverted profits tax.

Amazon’s change to its corporate structure means that it is now booking its sales through the UK, meaning resulting profits will be taxed by HMRC.

A spokesman was quoted as saying that Amazon was “now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg”.

Others To Follow?

And now eyes will turn to other tech giants such as Apple, Google and Facebook, which have also at the centre of tax avoidance allegations.

In 2012 the Public Accounts Committee (PAC) grilled executives from Amazon, Google and Starbucks over their “immoral” tax practices.

Earlier this month, a leading official at the Organisation for Economic Co-operation and Development (OECD), which is charged with reforming global tax rules, said technology companies are pushing “the boundaries of what is legal,” and they should stop using tax havens to shelter their profits.

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