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November 14, 2012

French tax authorities order Amazon to pay $252m in taxes

The pending taxes include penalties and interest on its earnings in the country between 2006-10.

By CBR Staff Writer

French tax authorities have asked online retailer Amazon to pay $252m in pending taxes and interest.

The tax authority claims that the company owes the money to the French government by shifting its profit to a Luxemburg holding to avoid taxes in the country.

According to the French authorities, the pending taxes include penalties and interest are based on its earnings in the country between 2006-10.

French authority alleged that Amazon has avoided paying corporation tax in France by shifting its profit to Luxemburg holding to take advantage of generous taxation policy there of non-domestic earnings.

Amazon said to have paid taxes at a rate of 11% on foreign profits last year when French government levies taxes on companies’ profit at a rate of 33%.

According reports, In 2011, Amazon had paid $4.2m in taxes, on a reported revenue of €110m, which claimed to be less than a tenth of company’s actual sales of €1.3bn.

Amazon told in a statement that the company disagrees with the proposed (French) assessment and wants to vigorously contest it.

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"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," Amazon added.

French government is also considering to find a way to levy tax the internet companies such as Google and Amazon in national and international levels, according to Reuters.

The authorities are planning to tax those companies who operate online businesses through channel sales in Europe from countries like Luxembourg taking advantage of low value added taxes, or low corporate tax in Ireland.

European Union rules on freedom of trade within the bloc generally allow firms to sell freely into one EU market from another.

A French spokesperson Najat Vallaud-Belkacem was quoted by Reuters as saying that even if the internet is a zone of freedom it shouldn’t be a lawless zone.

"Fiscal rules should be able to be applied to those activities as well," Vallaud-Belkacem.

The tax claim from French government has come when the company is facing a similar scrutiny over non-payment of taxes in the UK.

Earlier this week, a panel of UK lawmakers grilled Starbucks, Google and Amazon for not paying more tax in the country.

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