Amazon Under Scrutiny Over EU Tax Affairs

Online retail firm Amazon is facing a potential investigation by EU officials over its Luxembourg tax hub.

The EU's competition commission has demanded that the country's Grand Duchy hand over documents of the tax status given to Amazon, including any potential state aid.

The retailer has come under increasing scrutiny over structures that allow customer revenue from member states to be assessed for taxation purposes at its Luxembourg hub.

According to the Financial Times, the company has 800 staff at its headquarters, where £13.6bn in EU sales were logged last year, thereby reducing its effective tax rate by 8%.

It quoted an EU official as saying: "We are looking into what kind of arrangement Luxembourg has with Amazon."

The US firm has come under criticism in the EU over warehouse working conditions, purchasing power over suppliers and claims it has a damaging effect on other retailers.

Amazon's warehouse working conditions have been criticised

Amazon is the latest firm to see its tax status come under scrutiny amid a clampdown on favourable conditions given to certain multinational corporations.

EU investigations have already been launched into Apple in Ireland, Starbucks in the Netherlands and Fiat Finance in Luxembourg.

Starbucks has since announced a decision to move its EU headquarters to Britain.

Luxembourg has the highest per capita GDP in the world, according to the International Monetary Fund, while the World Bank and United Nations rank it third highest.

G20 member countries have agreed to greater cross-border tax information exchange, in a principle supported by the Organisation for Economic Co-operation and Development.

The EU intends to implement new rules about 'transfer pricing', where local divisions must buy goods and services from a parent firm located in another jurisdiction.

Westminster's Public Accounts Committee (PAC) chair Margaret Hodge previously called Amazon's finance arrangements an "extremely aggressive tax avoidance strategy".

She told the newspaper: "We welcome this examination of Amazon's tax affairs and hope the investigation contributes to putting an end to profit-shifting.

"I only wish the British authorities would be so assertive."

In 2012, the PAC questioned top executives from Amazon, Starbucks and Google over their tax strategies and effective UK tax rates.

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