Amazon hit with US$294m bill amid renewed EU tax crackdown

LONDON (BLOOMBERG) - Amazon.com Inc. was hit by a European Union order to pay 250 million euros (S$400.75 million) plus interest in back taxes to Luxembourg as the world's biggest online retailer became the latest US giant to fall foul of the bloc's state-aid rules.

The European Commission on Wednesday (Oct 4) also said it's suing Ireland for failing to recoup last year's record 13 billion-euro bill from Apple Inc.

"Luxembourg gave illegal tax benefits to Amazon" and "as a result, almost three-quarters of Amazon's profits were not taxed," EU Competition Commissioner Margrethe Vestager said in an emailed statement.

The Amazon decision adds to a growing list of scalps for Margrethe Vestager in her crackdown on tax loopholes. It follows the Apple decision last year, which reverberated across the Atlantic with the EU accusing Ireland of granting unfair deals that reduced the company's effective corporate tax rate.

At stake in all these decisions are billions of euros that multinational companies have squirreled away in tax havens, out of the reach of authorities in the countries where they make most of their sales.

Amazon, which said it will have 65,000 employees by the end of this year, denied receiving special treatment.

"We paid tax in full accordance with both Luxembourg and international tax law," Amazon said in an emailed statement. "We will study the commission's ruling and consider our legal options, including an appeal." The EU is targeting what it views as unfair tax practices that give a selective advantage to some companies to attract their business and the jobs attached.

The same team is poised to rule on McDonald's Corp.'s tax affairs in Luxembourg in the coming weeks, according to three people familiar with the cases who spoke on condition of anonymity. Competition watchdogs are also weighing a more general crackdown on special tax deals that EU countries offer big corporations.