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Oct 7 2014, 10.30am GMT


Another U.S company is under scrutiny from the European Commission for Tax.

After Apple comes Amazon in another probe into allegations of favourable tax rulings. From Apple in Ireland, attention is now turning to Amazon in Luxembourg as the European Commission focus on whether the tech company gained favourable taxation in a 2003 ruling in the mainland European Duchy. Tax exposure in Luxembourg is capped and will provide a tax bill of just 1 percent on any income made in Europe.

Antitrust violations are a hot topic for the European Commission at present, with investigations into Fiat SpA, again in Luxembourg, Apple in Ireland, and Starbucks Corp. in the Netherlands – all companies that have benefitted from the low tax rates in their chosen countries. However, the point is if they benefitted from individual arrangements and illegal state subsidies to gain favourable rates – for Amazon this is over the course of 10 years, in Apple’s case, the time in question is 35 years.

Jean-Claude Juncker, Luxembourg’s premier, will take up the mantle of European Commission president soon, which could be uncomfortable as he would have overseen the Amazon entry into his country in 2003.

The injunction from Brussels comes after Luxembourg refused to comply with requests to see the tax rulings.

Last week Amazon shares dropped to about $311.00, close to August 2014 levels of about $303.00 but recovered this week to today’s price of $322.20. With no immediate ruling from the European Commission and releases appearing on Amazon.com for new series [Amazon Originals Hand of God and Red Oaks] to be released on Prime Instant Video, the new Blake Shelton album on Prime Music and two all- new Kindle tablets, the Fire HD and Fire HDX, Amazon are still in favour with customers.

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