News May 27, 2015 05:08 AM EDT

Amazon pays $16M tax in Germany despite $11.9B profit; company starts tax honesty in 4 European countries

By Staff Writer

Web-based retailer Amazon Germany has paid $16 million in taxes in the said country. The tax payment is based on their $11.9 billion sales last year which the company considers as low. Amazon has also started being open about their sales in 4 European countries which would mean having to pay more taxes.

Based on a report, gmbH, Amazon's operating unit in Germany, paid 11.9 million Euros or $16 million as tax for the year 2014. This despite them having a profit of $11.9 billion in the said country. Based on accounts filed in the later part of April which was only made public these past few weeks, Amazon profited only 32 million Euros from its customers in Germany for various products sold on the internet. Amazon paid 11.9 million Euros of corporate income tax or roughly $16 million, basing on the average exchange rate in 2014 which is $1=0.9173 euros.

Amazon Germany's spokesperson admits that e-commerce is a low-margin and a very competitive industry but they still remain to do serious business globally despite having low profits. He stressed that taxes are based on profits (returns minus cost) and not revenues (sales collected).

Amazon Germany manages the website in the country but is financed by payments from companies in Luxembourg. Amazon has a tax agreement with the small country and has since been paying lower taxes there although it is legal. However, Amazon announced that it had already brought in changes in their branches in Germany, UK, Italy and Spain starting May 1 so that their upcoming proceeds would be directly booked in the said four European countries. According to tax professionals, this could mean Amazon would be obliged to pay more taxes in the future.

With this sales declaration, a report says this could affect other multi-national companies under the scrutiny of the European Commission who try to avoid paying taxes.

Meanwhile, despite this move by Amazon, a source says that the European Commission would still continue probing into the company's previous dealings with Luxembourg.

Amazon is not the only company the European Commission is looking into when it comes to sales declaration and tax payments.

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