Amazon’s Tax Planning and Transparency

This article will explore Amazon’s tax planning strategies and its approach to tax transparency.

1. Amazon’s Tax Planning in Europe

In 2017, the European Commission accused Luxembourg’s tax authorities of assisting Amazon in avoiding €250 million (approximately ¥2 billion) in taxes between 2006 and 2014 through tax rulings, which allegedly violated the EU’s State Aid rules. The Commission ruled that Amazon must pay the owed taxes to Luxembourg, but the e-commerce giant decided to appeal the decision to the European Court of Justice, with no final outcome as of yet. Through its tax planning, this American company managed to avoid paying taxes on 75% of its profits in Europe, achieving an effective tax rate of only 25% of the statutory rate. Let’s examine how Amazon leveraged Luxembourg to achieve this tax avoidance.