Amazon is EC's next target in tax crackdown

Amazon is EC's next target in tax crackdown

Amazon could be the European Commission’s next target when it comes to cracking down on unfair tax arrangements after Apple, its competition commissioner Margrethe Vestager has said.

In an interview with EuroAciv.com, Vestager said: "When it comes to tax rulings in the pipeline we have Amazon and McDonald’s.”

Her comments come after the c.e.o of the Booksellers Association, Tim Godfray,  told a conference last week that: “Amazon are absolutely enormous, but following the Apple ruling, are we going to see the EU take on Amazon? I would be very surprised if we did not see this happen.”

The EC ruled in August after a three-year investigation that Ireland should recover up to €13bn (£11bn) from Apple in back taxes after concluding the US firm's Irish tax benefits were illegal.

The commission ruled Ireland had enabled the company to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%.

Both the Irish government and Apple have said they intend to appeal the ruling, but Vestager said the EC had always prepared for this liklihood and had prepared a very “robust” case.

The commission’s investigation into Amazon and McDonalds both involve Luxembourg. The EC’s probe into Amazon was opened in October 2014, looking into whether a tax ruling in 2003 that could amount to Luxembourg giving Amazon state aid, which would be in violation of the trade bloc’s rules.

The accusation if that Amazon EU Sàrl pays a tax deductible royalty to a limited liability partnership established in Luxembourg but which is not subject to corporate taxation in Luxembourg. "As a result, most European profits of Amazon are recorded in Luxembourg but are not taxed in Luxembourg," the commission said at the time it opened the investigation.

Amazon maintains it has received no special tax treatment from Luxembourg. "We are subject to the same tax laws as other companies operating here," a spokesperson has said.

In the aftermath of the Apple and Fiat rulings, Vestager said: "All companies – big or small, multinational or not – should pay their fair share of tax.”

Amazon declined to comment because the case is on-going.

The e-commerce giant is also facing an EC antitrust investigation into the way Amazon distributes e-books and its relationship with publishers, which was opened in June 2015.