There is little doubt that Amazon is one of the biggest online retailers in the world. People from all over the globe are routinely buying anything and everything they can find on the site. That doesn’t mean that everyone loves Amazon, and its latest enemy is someone that the company didn’t expect. The French government recently gave Amazon a tax bill that totaled a whopping $252 million. France has said that Amazon owes back taxes, interest and penalties related to “the allocation of income between foreign jurisdiction.”
These allegations come as the American company extends its reach in the United States with endeavors like their recent locker system at Staples. France is just one of the European countries that believe Amazon.com (News - Alert) and other Internet companies are unjustly keeping their foreign tax bills low by funneling their main profit centers through low tax countries. These tax havens make the cost of doing business lower than if Amazon went through what France and most of Europe would consider the proper channels. The $252 million charge apparently relates to the tax years of 2006 through 2010.
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Not surprisingly, Amazon does not agree with the assessment, issuing a statement attached to their third quarter earnings report that said, “We disagree with the proposed assessment and intend to vigorously contest it.”
The company also referred to the tax bill during a presentation to the British Parliament. The fight had not been well known until those comments. Amazon directs most of it profits through Luxembourg, which offers significant benefits to companies who claim that they are based in that country.
Amazon is hardly the only Internet giant getting in trouble with members of the European Union. France is also taking a long hard look at Google’s (News - Alert) numbers, who channels their sales through Ireland. There is one report, (which Google has denied) that they recently got a bill for more than $1 billion in back taxes.
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Edited by Brooke Neuman