Will Amazon escape the 15% worldwide tax? – EconomyMorning


The agreement is historic: the G7 countries have decided to apply a minimum tax rate of 15% in order to fight against tax optimization. In the line of sight, of course, the GAFA which are numerous to benefit from the advantageous taxation of Ireland and other countries like Luxembourg. But already some specialists are worried about a possible hole in the racket …

A minimum 15% tax but …

The agreement, announced on Saturday June 5, 2021, sets the minimum tax rate for businesses at 15%. Co-signed by the G7 countries (Germany, Canada, United States, France, Italy, Japan and United Kingdom), it should be adopted on a wider scale. Above all, it is a first step for a game-changing global tax reform.

The deal, however, has come under criticism: the 15% tax rate is relatively low, experts say. Joe Biden, at the origin of this agreement, wanted a rate of 21%, but some countries felt it was too high.

But, now, another problem is raised: the definition of companies that will be subject to this minimum tax is unclear … and according to Amazon specialists could escape it, while the e-commerce giant was indeed one of the targets.

Global Tax Agreement: The Margin Problem

According to the agreement, in any case according to the G7 press release which was published, the taxation will apply, for the largest companies, as soon as the realized margin exceeds 10%. This is where the problem lies…

Amazon, in fact, achieved a turnover of 386.1 billion dollars in 2020 but has only a very small margin, because of its e-commerce activity on which the group earns very little. The margin stands at 6.3% globally… ie less than the 10% set by the G7. If Amazon achieved a net profit of 17.76 billion dollars in 2020, it is mainly thanks to its cloud division, Amazon Web Services (AWS) which ended the year 2020 with a profit of 13.5 billion dollars. .

However, as Paul Monaghan, director of the Faire Tax Foundation, underlines in the columns of the daily The Guardian, on the bass of the press release, Amazon is not included »By the tax. If there is another level of detail that may suggest that Amazon will be included in the tax, that’s fine, but it’s not yet known.