Germany: Amazon Pays $16M in Tax, Earns $16B
The company decided to declare its revenues since European regulators started to investigate its accounting practices.
Internet retailer Amazon paid about US$16 million to Germany in 2014, while the giant multinational recorded a total earning of US$16 billion in that country, according to the country’s regulators.
In the past, the multinational firm had managed to significantly reduce its tax bill by funneling almost all its sales through Luxembourg, a low-tax haven located in the middle of Europe.
However, Amazon group came recently under fire when tax regulators from Germany – the company’s bigger market after the United States, Britain, Italy and Spain, and therefore decided to start reporting its revenue in those countries since April, a spokesperson informed earlier in May.
The tax report filed in Germany, made recently available to public, showed Amazon paid corporate income tax of about US$16 million, according to the average exchange rate for 2014, and declared a profit of only US$43 in that country.
“Corporate tax is based on profits, not revenues. E-commerce is a low-margin business and highly competitive, and Amazon continues to invest heavily around the world, which means our profits are low,” an Amazon Germany’s spokesman said.
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Amazon’s decision to start reporting taxes in these European countries could be related to the recent legislation voted in U.K. commonly called “the Google tax,” which applies a 25 percent levy to corporations who are judged to be avoiding taxes by routing their profits through other countries. The measure started to be effective in April. In the U.K., the multinational firm declared over US$7 billion of sales profit in 2013, but paid US$6.5 million in taxes, reported the Guardian.
Other multinationals have been under the scrutiny of European regulators recently, including Apple in Ireland, Starbucks in the Netherlands, and Fiat in Luxembourg, whose practices will reviewed by the European Consumer Rights Commission.