Amazon.com, Inc. (AMZN) Under Scrutiny over EU Tax Irregularities Allegations

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Amazon.com, Inc. (NASDAQ:AMZN) has been dragged into a major tax crackdown by the EU after officials demanded documents relating to its tax affairs in Europe. EU’s officials have already instructed Luxemburg where the company’s European business operations are headquartered to hand over details on the company’s tax payments for further verification. Matt Welch, ‘The Independent’ Co-Host, in an interview on Fox Business News affirmed that Amazon shareholders need not, to worry as these things are about policies in Luxemburg and Ireland.

Amazon.com, Inc. (NASDAQ:AMZN), Piper Jaffray (NYSE: PJC), Netflix, Inc. (NASDAQ:NFLX),

“On the narrow question of whether Amazon is going to be affected by this particular lawsuit. I would say ‘don’t worry about it.’ It is not a big deal,” said Mr. Welch.

Western European countries have in the recent past been pursuing companies they perceive to be monopolistic such as Google Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT), on allegations of tax discrepancies.

Higher tax rates in the U.S has essentially pushed many companies such as Amazon.com, Inc. (NASDAQ:AMZN) to carry out most of their operations in Europe where tax rates are extremely low. Chad Morganlander, a portfolio manager at Stifel Nicolaus, on the other hand, has stated that such tax concerns in Europe will not have a long-term effect  on the overall market multiples, for the likes of Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) or Google Inc. (NASDAQ:GOOG).

The probe according to reports will try to find out whether tax arrangements offered to Amazon.com, Inc. (NASDAQ:AMZN) in Luxemburg give it an unfair competitive advantage compared to other companies thereby amounting to illegal state aid.

Mr. Morganlander believes that the recent inquiries by the EU officials are part of efforts by some countries to get their tax rates in the same range with other nations in the same trading block. Mr. Morganlander expects more companies to move into Europe despite the ongoing crackdown to enjoy the tax benefits.

“U.S corporations are going to move overseas to take advantage of corporate taxes. That to the U.S is a net negative” said Mr. Morganlander.

Disclosure: none

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