Yahoo – AFP,
Joseph Schmid, 5 February 2018
US online retailer Amazon said Monday that it has settled a major tax claim in France and will start declaring all its earnings in the country in a response to building European pressure on the digital economy giants.
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| US online shopping giant Amazon said it has struck a deal with the French government to settle a bill for nearly 200 million euros ($249 million) in unpaid taxes |
US online retailer Amazon said Monday that it has settled a major tax claim in France and will start declaring all its earnings in the country in a response to building European pressure on the digital economy giants.
Amazon did
not reveal how much it had paid over a French claim for nearly 200 million
euros ($249 million) covering the period from 2006 to 2010.
It is one
of several American technology giants in the line of fire in Europe over their
tax-avoidance strategies, which often sees them route their income through
low-tax nations -- in Amazon's case, Luxembourg.
French
President Emmanuel Macron has proposed a new mechanism for taxing US tech
companies that would take into account the volume of sales generated in each
European country, rather than on the profits that are booked through low-tax
jurisdictions.
Amazon announced
a similar tax settlement deal with Italy in December, paying 100 million euros
to settle an investigation into suspected tax evasion from 2011 to 2015, while
also agreeing to declare its income locally.
In 2012,
Amazon revealed that it had been hit with a 198-million-euro tax bill in France
for back taxes, interest and penalties relating to income spread between
different jurisdictions.
At the
time, the company had said it disagreed with the French assessment and vowed to
"vigorously" fight it.
In its
statement Monday, Amazon said it had created a French subsidiary for its
European operations in August 2015, "with all retail revenues, expenses,
profits and taxes due now accounted for in France."
The
retailer also said it had invested over 2 billion euros in France since 2010,
creating more than 5,500 jobs.
'Electroshock' plan
European
officials have vowed to make the digital economy giants known as GAFA --
Google, Amazon, Facebook and Apple -- pay a greater share of their taxes in the
countries where they earn their profits.
Under
current EU law, companies based outside the bloc can declare their earnings
from across the 28-nation market in a single country.
That has
led them to pick low-tax nations like Ireland, the Netherlands or Luxembourg --
depriving other member states of revenues, even though they may account for a
bigger share of the earnings.
The
Organisation for Economic Cooperation and Development says such rules cost
governments around the world as much as $240 billion (193 billion euros) a year
in lost revenue, according to a 2015 estimate.
On Sunday,
EU Economic Affairs Commissioner Pierre Moscovici said he would unveil by the
end of March a plan to "create a consensus and an electroshock" on
taxing digital economy revenues.
"The
idea is to be able to identify the activities of digital companies, so we need
a range of indicators -- the number of clicks, the number of IP addresses,
advertising, and eventually revenues... and then we'll find ways to tax
them," Moscovici said.
He said the
new rules would apply to the GAFA giants, as well as accommodation services
like AirBnB and Booking.com.
Changes
underway
American
tech giants appear to believe the European tax revamp is in the cards, with
several already announcing pledges to pay more in each country where they
operate as governments step up their fiscal demands.
Facebook
said in December that it would start declaring advertising revenue in the
countries where they have offices, instead of recording it at its international
headquarters in Dublin.
"We
believe that moving to a local selling structure will provide more transparency
to governments and policy makers around the world," the social network's
financial chief Dave Wehner said at the time.
France is
pursuing Google for 1.12 billion euros it says it owes in back taxes, after
paying just 6.7 million euros in corporate tax for 2015 by booking most of its
revenues through Ireland.
A court
initially ruled that Google was not liable for the tax claim, but the
government has appealed the decision -- while saying it was still open to a
settlement.
The search
giant has already agreed to fiscal deals with Britain and Italy over the Irish
tax arrangement.
Amazon's
settlement comes as it is also facing a court case in France over claims it has
abused its dominant position on its "marketplace" platform for
third-party vendors.
The finance
ministry said in December that it was seeking a fine of about 10 million euros.
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