Amazon revising tax policies
Amazon is revising the way it reports earnings. From now on, the company will book it’s earning in the countries it actually earned them instead of channeling most of the earnings to Luxembourg. This is likely to be caused by the continuing scrutiny from the European Union on multinationals and their tax deals with European countries. Amazon already has an investigation running against them because of such deals with the Luxembourg government. Amazon is not the only company that has allegedly made tax deals with European countries. Apple and Google have been under investigation for more than a year now, with Apple apparently having to pay back billions of euros to the Irish government.
These investigations of the European Commission might have a significant impact for countries deemed as ‘tax-havens’ within Europe. Countries like Liechtenstein, Luxembourg, Ireland and The Netherlands all have alleged deals in place with big foreign multinationals. The Netherlands has arrangements to deduct taxes on profits made from ‘innovative’ products and services. Ireland has a method called ‘Double Irish” in which companies can funnel profits through the country to other countries that have no income tax whatsoever.
The move made by Amazon is likely done to encourage other tech companies to do the same. If it will have any impact however, is to be seen.
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