Amazon may prove exception to global taxes rules
10 June, 2021
The Group of Seven wealthy nations may have endorsed a plan to ensure the world's biggest companies pay a minimum global tax rate, but U.S. tech behemoth Amazon may get away it.
The landmark package is supposed to help end top multinationals searching for countries with low corporate tax rates where to book their profits rather than paying where they conduct their business.
By introducing the very least tax rate of 15 percent without exceptions proponents of the program hope multinationals will have less incentive to undergo complex efforts to change where they pay taxes.
There is a second "pillar" in the program: countries would be permitted to tax a share of the profits of the most lucrative companies on the planet, regardless of where they are based.
The caveat: it applies and then companies whose profit margins exceed 10 percent.
That would affect about 100 corporations, including U.S. tech giants such as Facebook and Google, but as some experts have pointed out, not Amazon.
Despite Amazon's colossal footprint and marketplace capitalization greater than $1 trillion, its profit percentage last year amounted to just 6.3 percent.
It didn't take a long time before the first brickbats were aimed at the offer by Britain's Fair Tax Foundation.
"Only one more reason behind the G20 to revisit and embolden the deal" when the band of the world's best industrialized and emerging nations look to signal off on the arrangement the following month, the group stated on Twitter.
A source near to the talks verified that Amazon overall wouldn't normally are categorized as the provisions allowing countries to tax portion of its profits.
On the other hand its cloud computing arm, Amazon Web Services (AWS), "turns in profits of around thirty percent" and "it will therefore be taxed upon this segment of activity" by different nations, said the source.
There is absolutely no other "exception" or loophole in the provisions, the source added.
Amazon, which has been surfing a great e-commerce wave since COVID-19 hammered bricks and mortar retail, more than tripled it has the first quarter net profit for this 12 months to $8.1 billion.
AWS meanwhile found its quarterly product sales soar 32 percent to $13.5 billion.
Like fellow online huge Facebook, Amazon welcomed the G7 accord.
In a statement to AFP, the business called it "a welcome step of progress" that will "help bring balance to the intercontinental tax system."
Amazon's country director for Italy and Spain, Mariangela Marseglia, declared herself "happy" with the offer reached by financing ministers and central bankers of the Band of Seven wealthy states above the weekend.
She said it adopts "a uniform method of the taxation of multinational companies (which) is what we've been trying to pursue for years."
Amazon has very long supported countries working alongside one another on corporate taxation, she said, so that you can reduce the threat of double taxation.
That may be an allusion to taxes imposed unilaterally by countries including France, Italy, Spain and Britain that will fall apart once a worldwide agreement takes effect.
Amazon has been variously targeted by the United States and several European countries over its tax optimization arrangements involving advanced accounting schemes which exploit dissimilarities in different jurisdictions,
Essentially this involves booking profits in countries with fairly low tax levels while conversely declaring losses where tax levels are more significant.
Such measures allow Amazon to considerably lower its tax bill.
Amazon says it really is now holding out on the details of a worldwide accord.
The reform now would go to a G20 finance ministers meeting in July before moving to negotiations between 139 countries overseen by the business for Economic Co-procedure and Development.
Source: japantoday.com