The landmark deal is supposed to help put an end to top
multinationals shopping for countries with low corporate tax rates in which to
book their profits instead of paying where they conduct their business.
By introducing a minimum tax rate of 15 percent without
exceptions proponents of the plan hope multinationals will have less incentive
to go through complex efforts to shift where they pay taxes.
Top 100
There is a second "pillar" in the plan: countries
would be allowed to tax a share of the profits of the most profitable companies
in the world, regardless of where they are based.
The caveat: it applies only to companies whose profit
margins exceed 10 percent.
That would affect about 100 companies, including US tech
giants such as Facebook and Google, but as some experts have pointed out, not
Amazon.
Despite Amazon's colossal footprint and market
capitalisation of more than $1 trillion, its profit margin last year amounted
to just 6.3 percent.
It did not take long before the first brickbats were aimed
at the deal by Britain's Fair Tax Foundation.
"Just one more reason for the G20 to revisit and
embolden the package" when the group of the world's top industrialised and
emerging nations look to sign off on the arrangement next month, the group said
on Twitter.
Amazon caught by web
A source close to the talks confirmed that Amazon overall
would not fall under the provisions allowing countries to tax part of its
profits.
However its cloud computing arm, Amazon Web Services (AWS),
"turns in profits of around 30 percent" and "it will therefore
be taxed on this segment of activity" by different nations, said the
source.
There is no other "exception" or loophole in the
provisions, the source added.
Amazon, which has been surfing an e-commerce wave since
COVID-19 hammered bricks and mortar retail, more than tripled its first quarter
net profit for this year to $8.1 billion.
AWS meanwhile saw its quarterly sales soar 32 percent to
$13.5 billion.
Like fellow online giant Facebook, Amazon welcomed the G7
accord.
In a statement to AFP, the company called it "a welcome
step forward" which will "help bring stability to the international
tax system."
Uniform approach welcomed
Amazon's country director for Italy and Spain, Mariangela
Marseglia, declared herself "very happy" with the deal reached by
finance ministers and central bankers of the Group of Seven wealthy states over
the weekend.
She said it adopts "a uniform approach to the taxation
of multinational companies (which) is what we have been trying to pursue for a
long time."
Amazon has long supported countries working together on
corporate taxation, she said, in order to reduce the risk of double taxation.
That may be an allusion to taxes imposed unilaterally by
countries including France, Italy, Spain, and Britain which will fall away once
a global agreement takes effect.
Amazon has been variously targeted by the United States and
several European countries over its tax optimisation arrangements involving
sophisticated accounting schemes which exploit differences in different
jurisdictions,
Essentially this involves booking profits in countries with
relatively low tax levels while conversely declaring losses where tax levels
are higher.
Such measures allow Amazon to considerably lower its tax
bill.
Amazon says it is now waiting on the details of a global
accord.
The reform now goes to a G20 finance ministers meeting in July before moving to negotiations between 139 countries overseen by the Organisation for Economic Co-operation and Development. - Agence France-Presse
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