In the historical agreement of the “Big Seven” countries, aimed at collecting higher taxes from the largest companies in the world, there is a huge barrier. Issue will allow to get away from such obligations to the American Giant Amazon, writes The Guardian.
Agreement assumes that companies will pay a certain percentage of profits in those markets where they achieve a significant amount of sales. Agreements should also establish a minimum level of income tax for large companies – 15 percent. However, measures must touch enterprises with profitability of at least 10 percent, and we are talking about the profits over this indicator.
Such criteria can allow Amazon, one of the largest corporations of the world with a market value of 1.6 trillion dollars, to avoid new requirements. The company’s subsidiary in Luxembourg did not pay a corporate tax last year, although sales revenues in Europe reached 44 billion euros.
This situation makes Amazon a noticeable target for politicians who are customized to change the global taxation system. However, the profitability of the corporation in 2020 amounted to only 6.3 percent, which is explained in part with serious reinvestings, and partly the efforts to seize the share in the market.
Available official data on the Agreements of the G7 authorities suggest that Amazon new requirements are not covered, Paul Monaga drew attention, executive director of the Fair Tax Foundation – a British organization that certifies the companies that are not coming from taxes. “If there are some other details that allow you to talk about inclusion in this framework Amazon, then this is excellent, but so far there is no such information,” he explained.
Richard Murphy, who teaching the accounting case in Sheffield University in the UK, stressed that a 10 percent threshold is an inappropriate criterion, since different companies resort to various business models, and the current approaches to profits can be “easy to get around.”
Agreements on changes in taxation of large corporations Representatives of the “Big Seven” countries reached at a meeting in London on June 5. The head of the Ministry of Finance of Great Britain explained that it is about the largest companies with profitability of at least 10 percent, and at the same time 20 percent of the profits over this threshold will be taxed in those countries where corporations are selling.