There is a huge gap in the historic G7 agreement to collect higher taxes from the world’s largest companies. The omission will allow the American giant Amazon to get away from such obligations, writes The Guardian.
The agreement assumes that companies will pay a certain percentage of profits in markets where they generate significant sales. The agreements should also establish a minimum level of income tax for large companies – 15 percent. However, the measures should concern enterprises with a profitability of at least 10 percent, and we are talking about profits in excess of this indicator.
Such criteria could allow Amazon, one of the largest corporations in the world with a market value of $ 1.6 trillion, to avoid new demands. The Luxembourg subsidiary did not pay corporate tax last year, even though sales in Europe reached 44 billion euros.
This situation makes Amazon a visible target for politicians who are determined to change the global tax system. However, the profitability of the corporation in 2020 was only 6.3 percent, which is due in part to serious reinvestment, and in part to efforts to capture market share.
The available official data on the agreements of the G7 authorities indicate that Amazon does not cover the new requirements, said Paul Monaghan, executive director of the Fair Tax Foundation, a British organization that certifies tax-exempt companies. “If there are any other details that allow us to talk about including Amazon in this framework, then that’s great, but so far there is no such information,” he explained.
Richard Murphy, an accounting professor at the University of Sheffield in the UK, stressed that the 10% threshold is not an appropriate criterion because different companies have different business models and current approaches to reflecting profit can be “easily circumvented”.
Representatives of the G7 countries reached agreements on changes in the taxation of large corporations at a meeting in London on June 5. The head of the UK Treasury explained that we are talking about the largest companies with a profitability of at least 10 percent, and at the same time 20 percent of profits above this threshold will be taxed in those countries where corporations sell.