Italy Investigates Amazon for Alleged Tax Avoidance
Amazon’s Italy chief tells Bloomberg the company is cooperating with the authorities
European Union member states continue their crackdown on American companies that they believe have avoided tax payments. Amazon.com, Inc. (NASDAQ:AMZN) is the latest company under investigation for its tax dealings in Italy, the company’s chief for Italy and Spain, Francois Nuyts told Bloomberg on Tuesday.
The probe over alleged tax avoidance by Amazon Italy was initiated on March 9 by the prosecutor’s office in Milan, as per the Italian news agency Ansa. Mr. Nuyts did not dwell too much on details concerning the tax probe, but said that the company is complying with the regulators. It is unknown at this point how much in taxes Amazon allegedly owes the Italian government.
The chief reiterated that Amazon has paid all binding taxes as per the legal jurisdictions in every geographical region where the company operates. He stated that Amazon is expanding heavily in Europe, and in the last six years it has invested more than 15 billion euros in the region. “E-commerce is a low-margin business, and Amazon is in a phase of heavy investment, so profits are slim”,Mr. Nuyts said.
Italy has ramped up its investigation against US companies since the turn of 2016. It is probing Alphabet Inc. for alleged tax evasion worth $278 million for the four-year period 2009-2013.
Interestingly, Apple Inc. was also probed for allegedly dodging tax payments worth almost $1 billion between 2008 and 2013, after failing to declare the revenue it generated in Italy. Even though the company and its executives were placed under fraud investigation, the iPhone maker reached an agreement with the Italian regulators last December and ended the dispute with a $350 million settlement payment.
If the investigation takes a negative turn, Amazon might want to look into Apple’s case and settle the case mutually, if it is to avoid tax penalty payments worth billions. Moreover, there is a chance Italian authorities may be less hostile to Amazon; Italy holds certain Amazon executives in high regard. The government is looking to appoint Amazon’s International Consumer Business SVP, Diego Piacentini, as an advisor to the cabinet over matters concerning digital technologies.
But elsewhere in Europe, tax probes are likely to be stricter. The European Commission has already fined Fiat Chrysler and Starbucks for their tax avoidance arrangements with the governments of Luxembourg and the Netherlands. Amazon is being investigated in Luxembourg for a similar reason; it reportedly owes $1.5 billion from 2005-2013 on revenue earned from its British arm, which is re-routed to an affiliate in Luxembourg. The arrangements helped Amazon to pay only $3.3 million in British taxes for 2013, against revenue worth almost $6 billion.
