By Ron Howells • 09 June 2021 • 10:34
G7 Countries Devise Clever Way To Snare Amazon In Tax Net. image: Wikimedia
G7 Countries Devise Clever Way To Snare Amazon In Tax Net.
G7 states have found a clever way to include Amazon, one of the world’s biggest online retailers, on a list of 100 companies set to face higher taxes in the countries where they do business by targeting its more profitable cloud-computing unit, say officials close to the talks.
Some European countries had concerns that Amazon may fall out of the scope of the proposed new rules because its overall operating margin as a company is less than 10%- a threshold set as a basic criterion for companies on the list.
However, as Amazon Web Services (AWS) business has a margin of more than 30%, Amazon as a whole can be included, the officials, who spoke on condition of anonymity, told Reuters.
International talks on a global minimum corporate tax which was agreed by the Group of Seven rich countries on June 5 are running in parallel with talks on how to divide the rights of tax excess profits, those which can be considered routine, of the world’s 100 biggest, most profitable companies.
G7 finance ministers agreed that governments should get the right to tax at least 20% of profit earned in their country by a multinational when this profit was over a 10% margin.
“We now decided that if a corporation as a whole does not reach the profitability limit, but a large division of it exceeds the G7 thresholds, it must be included,” a source close to the discussions said.
“With this, we’re aiming exactly at Amazon,” the source added.
Without singling out Amazon, a British government source familiar with the negotiations said consideration was being given to how the rules would apply to companies that had different activities and business lines.
OECD head of tax Pascal Saint-Amans said that Amazon’s AWS unit would be liable because it had revenues exceeding a threshold of 20 billion euros.
“The profits linked to the cloud (business) will thus be shared among countries,” he said.
Amazon Web Services (AWS) is a cloud computing platform that powers many of the world’s most popular websites, including Amazon. On Tuesday, June 8, the service went down affecting millions of users worldwide.
The UK Government’s webpage was also affected, along with major news organisations including the New York Times, The Guardian, and the Financial Times. The New York Times, Guardian, Bloomberg and even HMRC websites were struck by outages.
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Ron actually started his working career as an Ophthalmic Technician- things changed when, during a band rehearsal, his amplifier blew up and he couldn’t get it fixed so he took a course at Birmingham University and ended up doing a degree course. He built up a chain of electronics stores and sold them as a franchise over 35 years ago. After five years touring the world Ron decided to move to Spain with his wife and son, a place they had visited over the years, and only bought the villa they live in because it has a guitar-shaped swimming pool!.
Playing the guitar since the age of 7, he can often be seen, (and heard!) at beach bars and clubs along the length of the coast. He has always been interested in the news and constantly thrives to present his articles in an interesting and engaging way.
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