Book and retail giant Amazon has come under fire over the years for its taxes, or more accurately, its failure to pay taxes that critics felt were long overdue. Whether in the US or abroad, the company has been able to take advantage of current tax law to its own interests, a fact that lawmakers literally around the world have been trying to fight.
In the US, a wave of “Amazon Tax” legislation was proposed in most states in an attempt to overturn a 1992 US Supreme Court decision that determined that (then) mail order companies didn’t face the insurmountable headache of trying to collect and report sales tax in every state, as each state sets its own sales tax percentage. Instead, the ruling stated that companies who conducted business via shipping goods to customers would only be required to collect sales tax in the state where the company was located. That became a sticking point for Amazon when states with distribution centers decided that physical location applied as a “location” for taxation. A number of states sued Amazon for back taxes and proposed legislative changes to combat the issue.
In the EU, Amazon has been criticized for its apparent tax-dodging by setting up operation in Luxembourg, a country known to be a haven for foreign corporations which include Google, Starbucks, and many more. The reason for the Grand Duchy address is to take advantage of the lowest tax rate in the EU, something which has local sellers through the Union upset, with claims that they cannot compete as they don’t have the opportunity to move their headquarters to Luxembourg.
While Amazon has always operated in legal compliance with these tax laws, an EU investigation launched in October 2014 will determine if there was anything amiss in the way that the retailer has setup operations. There have been recent allegations that claim Amazon has worked out a deal to receive what amounts to “state aid” from the government, which the investigation sought to uncover.
According to an article for Scotsman.com, “Crawford Spence, of Warwick Business School, who researches tax avoidance, said he felt Amazon’s tax deal in Luxembourg amounts to state aid.
“Professor Spence said: ‘The issue of whether Amazon’s deal with Luxembourg was a ‘sweetheart’ one constituting state aid seems to deflect attention from the main issue here: namely, that Luxembourg has long operated as a de facto tax haven within the internal market, effectively depriving other EU governments, and the EU in general, of significant tax revenues.
“’There is a simple way to put an end to these sorts of scandals: harmonise tax rules across EU member states.’”
Interestingly, this suggestion is one that Amazon has held up publicly for some time. The company has stated repeatedly that it will comply with any unified changes to tax structures and laws both in the US and abroad, but that it will not engage in single-player politics or measures that require the company to create a different tax structure in every location where it conducts business. So long as the law allows corporations to operate under these strictures, Amazon remains in compliance and will continue its operations as such.