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Expert comment on Amazon being ordered to pay back taxes by the EU

Posted by Warwick Business School at 05 October 2017, 14:15 CET |
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Expert comment on Amazon being ordered to pay back taxes by the EU from Louise Gracia, of Warwick Business School, who researches tax regulation.

"Amazon has deliberately engineered these dubious tax practices by diverting online sales made by customers in a number of EU countries - including Britain, France and Germany – through its Luxembourg operations and thereby taken advantage of the illegal tax saving opportunities on offer there.

"This fiscal sleight of hand has resulted in millions of pounds/euros of lost tax revenue to these EU economies. 

"Tax is not just about the money, it also has social and moral dimensions that are linked to notions of fairness and it being a shared responsibility. Where is the fairness and corporate responsibility in corporations not paying tax on the bulk of profits, or at rates that are wildly lower than those paid by other companies?

"This is a problem across national tax authorities in the EU (and beyond) where tax loopholes, differences in tax rules and regulations and layers of complexity within tax practices and organisational structures make it very difficult to decide how much a company trading across national boundaries owes in tax, and where that tax liability crystalizes.

"But public awareness of the tax practices of large multinationals is on the increase.  We are more interested than ever before in the tax behaviour of these organisations.

"Corporations are sensitive to being positioned as tax avoiders who do not front up to their moral and social tax obligations with the potential reputational damage that can be done to their corporate brands. Campaigns to boycott the products and services of a number of high profile tax-avoiding companies have proliferated in social media campaigns and on the streets in recent times.

"So, choosing to engage in aggressive tax avoidance and stall on settlements until the last possible moment are not consequence-free decisions for companies.

"However, the apathy displayed by some EU partners in addressing these tax failures clearly exacerbates matters – Ireland has yet to collect the €13bn of back taxes from Apple, with the European Commission now planning to take legal action against Ireland for this failure.

"While countries continue to collude with these corporate giants, any headway in levelling the tax playing field surely disappears over the fiscal horizon."

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