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Under pressure, Amazon ends Luxembourg profit funneling

By reporting revenue in other countries, Amazon may face higher tax bills, but could also pressure other multinationals to follow suit.

Online retailer Amazon has become one of the first big tech companies to shift its income stream away from Luxembourg and begin reporting revenue in other countries as regulators step up pressure against tax avoidance strategies used by large multinational firms.

Amazon has been under increasing pressure from regulators over its tax structure, including a European Commission investigation. The company was one of more than 300 featured in ICIJ’s Luxembourg Leaks investigation in late 2014 that revealed details of secret agreements made with Luxembourg that slashed tax bills of some of the world’s largest multinational corporations. 

Amazon started rolling out its new structure on May 1, and according to the Wall Street Journal, has already started booking revenue in the United Kingdom., Germany, Italy, and Spain.

It could mean larger tax bills for the retailer in a number of European jurisdictions and will likely add to pressure on other major multinational firms to follow suit.

The move comes at a time when governments are considering and enacting new measures to make it more difficult for companies to shift profits to low-tax jurisdictions.

Amazon’s change of structure, for example, will allow it to avoid a new punitive 25 percent tax in the U.K. on companies deemed to be routing profits offshore.

The European Union is also investigating tax rules across the economic and political bloc and earlier this year credited ICIJ’s Luxembourg Leaks investigation as paving the way for reform to the way countries report tax agreements made with multinational companies.

According to a report in the Global Edition of German business news outlet Handelsblatt, France and Germany may also lead a push for a minimum corporate tax rate across the European Union, as part of a crackdown on low-tax havens like Luxembourg and Ireland.

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