After the European Union’s executive branch slapped Apple with nearly $14 billion and Starbucks with over $20 million in back taxes, it appears the next target for its war on business is likely to be the on-line sales company: Amazon Inc.
The European Commission is investigating tax deals made between multinational corporations and European nations to ascertain if they received any illegal state-aid, which would give them undue competitive advantage.
The commission is looking at a 2003 tax deal that Amazon struck with Luxembourg that allegedly allowed them a lower and more attractive tax rate. The announcement of the investigation sparked outcry from Washington, which claimed that the commission was systematically targeting American businesses operating in Europe.
One of the key factors in the investigation that may not bode well for the online retailer is that it payed an untaxed subsidiary $3.73 billion from 2006 to 2013, the Journal reports. The reason the payment may be a bad thing for Amazon, other than a possible negative public perception problem, is that these are precisely the sort of untaxed transactions that the commission has been cracking down on in Europe.
If the commission finds the transfers of funds illegal, it has the power to order Amazon to pay back taxes just like it did with Apple and Starbucks. Both Luxembourg and Amazon deny that they struck a deal that gave the company any special advantage or treatment, the Journal reports.
It isn’t like Amazon would go broke if it were forced to pay back taxes by the commission, as it has a market capitalization of $388.89 billion. Even if the commission handed Amazon a decree, it could choose to appeal the decision. Apple and Ireland both chose to appeal the $14 billion order.
Experts project that a fine by the commission, if enacted, would be in the ballpark of $600 million.
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