France has demanded $252 million in back taxes from Amazon, it emerged
on Tuesday, increasing the pressure on the online retailer over its
controversial corporate structure in Europe.
Amazon is in a dispute
with the French authorities over the amounts involved and is ready to
take legal action if necessary, the company says in a document filed to
the Securities and Exchange Commission (SEC).
The document has been posted on the US stock market regulator's website.
back taxes, penalties and interest that the French are seeking from
Amazon relate to earnings in France for the years 2006-10 and "the
allocation of income between foreign jurisdictions."
reduces its exposure to corporation tax in France and most of the rest
of Europe by reporting European sales through a Luxembourg-based holding
company, taking advantage of the tiny Duchy's relatively generous
taxation of non-domestic earnings.
This arrangement allowed Amazon
to pay a tax rate of 11 percent on foreign profits last year - roughly
half the corporation tax it would pay, on average, in neighbouring
countries. France typically taxes the net profits of companies at 33
Television station BFM Business reported that Amazon had
paid 3.3 million euros ($4.2 million) in taxes in France for 2011, based
on reported sales of 110 million euros which were less than a tenth of
actual sales estimated at 1.3 billion euros.
rarely make public comment on the arrangement but the company has
insisted in the past that it is completely legal under European Union's
single market rules.
In its statement to the SEC, the company
said: "We disagree with the proposed (French) assessment and intend to
vigorously contest it.
"We plan to pursue all available
administrative remedies ... and if we are not able to resolve this
matter with the (French), we plan to pursue judicial remedies."
emergence of a dispute between the US multinational and the French
authorities emerged a day after Amazon's public policy chief in Europe,
Andrew Cecil, was grilled by British MPs who believe the company should
be paying much more tax there.
Cecil angered the lawmakers by
failing to answer straightforward questions about the company and its
earnings amid reports that Amazon's UK unit paid less than $2 million in
taxes last year on sales estimated to be close to $10 billion.
was unable to explain the corporate structure of the group and admitted
not knowing who owned the Luxembourg holding company.
parliamentary committee, which is also examining the tax affairs of
Google and Starbucks, slammed his evasive responses as unacceptable and
said it would be summoning a more senior Amazon executive to answer
It is not just in Europe that Amazon has run into problems with the tax authorities.
its statement to the SEC, it revealed that US and Japanese tax
authorities had reached an agreement on the allocation of the company's
earnings between those two countries for 2006-12. The cost to Amazon of
this settlement was "not significant", it said.
however also revealed that it remains under investigation by the US
Internal Revenue Service over its tax returns for 2005 and 2006.
also admitted that there was a chance of the company being hit by
demands for taxes dating back to 2003 in "various states and other
foreign jurisdictions" including China, Germany, Luxembourg, and