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- Amazon will join a list of the world’s 100 largest companies preparing face higher taxes in the countries where they do business
- There had been concerns that Amazon might fall out of scope since its overall operating margin is less than 10 per cent
- However, its Amazon Web Services (AWS) arm has a margin in excess of 30 per cent, meaning Amazon as a whole can be included
- Conversations regarding a global minimum corporate tax continue with a separate discussion about how to divide the right to tax excess profits
- The finance ministers of G7 nations agree that governments should be able to tax at least 20 per cent of profit earned in their country
G7 member states have found a way to include US tech giant Amazon on a list of 100 companies that will face higher taxes in the countries where they do business, according to officials close to the discussion.
Some European countries had been worried that Seattle-based Amazon might fall out of scope of the proposed new rules since its overall operating margin is less than 10 per cent — the threshold set as a criteria for companies on the list.
However, its more profitable Amazon Web Services (AWS) arm has a margin in excess of 30 per cent, meaning Amazon as a whole can be included.
Conversations regarding a global minimum corporate tax — which was settled on by the Group of Seven rich countries on June 5 — are continuing in parallel with a separate discussion about how to divide the right to tax excess profits of the world’s 100 largest companies.
The finance ministers of G7 nations agreed that governments should be able to tax at least 20 per cent of profit earned in their country by a multinational organisation, as long as its profit margin is more than 10 per cent.
“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,” said one source close to the discussion.
“With this, we’re aiming exactly at Amazon.”
Pascal Saint-Amans, head of tax at the Organisation for Economic Co-operation and Development (OECD), said Amazon’s AWS unit would be liable because it had revenues exceeding a threshold of €20 billion (roughly A$31.46 billion).
“The profits linked to the cloud (business) will thus be shared among countries,” he told France Info television.
