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Amazon didn’t pay corporation tax in Europe despite €44bn revenue

The Irish Times reports that Amazon did not pay any corporation tax in Europe last year, despite enjoying record sales of €43.8bn in 2020.

Corporate filings seen by the paper indicate that the online retail giant saw its European sales jump from €32bn in 2019 to €43.8bn in 2020, but that no corporation taxes were paid by Amazon EU Sarl to its European host-country of Luxembourg because the company nonetheless recorded a loss of €1.2bn.

The Irish Times reports:

The retailer was granted €56 million in tax credits due to that loss, adding to an accumulation of €2.7 billion in losses carried forward, which can be used to offset future tax bills if the company does report profits in the future.

The corporate filings required by Luxembourg are less detailed than in many countries and Amazon’s run to just 23 pages, meaning it is hard to establish how the loss occurred despite the vast revenues. Revenue is not broken down by country.

The accounts show expenses of €31.8 billion on “raw material and consumables”, €12.4 billion on “other external expenses”, and €230 million on “other operating expenses”. Staff costs were €538 million.

An Amazon spokesman told The Irish Times that capital investments and tight retail margins were to blame for the loss.

“Amazon pays all the taxes required in every country where we operate,” the spokesman said.

“Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low margin business.

“We’ve invested well over €78 billion in Europe since 2010, and much of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue, and supports small European firms.”

The accounts, which were audited by Ernst & Young, show Amazon had sales of over €8 million per employee, with 5,262 employees on the books in Europe during 2020.

The EU Commission has said it will “continue to monitor Amazon’s behaviour” in regards to corporation tax, as commentators question whether profits are being siphoned off to countries with more favourable tax arrangements.

The Fair Tax Foundation told The Irish Times that Amazon’s figures were “mind-blowing” and that the company had an estimated global corporation tax rate of 9.8 per cent over the last ten years.

“We are seeing exponentially accelerated market domination across the globe on the back of income that continues to be largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach,” Fair Tax Foundation CEO Paul Monaghan told The Irish Times.

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