Amazon.com Inc (NASDAQ:AMZN) has become a bit of a four-letter word in the European Union and is being held up as a poster child for tax loopholes in the EU that the Union believes has allowed Amazon.com Inc (AMZN) as well as Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG), among other online retailers to pay a minimal tax bill.
Recently, French tax authorities have sent a letter to Amazon.com Inc (NASDAQ:AMZN) saying that the company owes the French government about $250 million in taxes for sales in the country, and the United Kingdom is also looking to close its taxing loopholes so that Amazon.com (AMZN) would pay more than the estimated 2.5 percent on its profits earned in the country – simply because it channels all of its business through tax-light Luxembourg. The French government is working on an overall effort to close loopholes for all online businesses that generate sales in their country.
“We plan action at the national but also European and OECD (Organisation for Economic Co-operation and Development) level,” French government spokeswoman Najat Vallaud-Belkacem said to reporters. “Even if the internet is a zone of freedom it shouldn’t be a lawless zone. Fiscal rules should be able to be applied to those activities as well.” French authorities billed Amazon.com Inc (NASDAQ:AMZN) for $250 million to cover income that was gained “between foreign jurisdictions,” though EU rules allow companies to conduct commerce across borders within the EU bloc of countries and they would only be required to pay taxes in their country of origin – for Amazon, that is Luxembourg.
The U.K. is also taking aim at Amazon.com Inc (NASDAQ:AMZN), actually accusing the company of “stonewalling” when the company has been investigated by the Public Accounts Committee for “hiding” profits in Luxembourg which were earned in the U.K. The company has been asked to submit detailed information about the Luxembourg operation by next week.
As an investor, what do you think of these actions by European authorities? Does this impact your perspective on Amazon.com Inc (NASDAQ:AMZN) or your assessment of the future of the company as a worldwide entity? How do you think these wranglings affect investors like billionaire Jim Chanos of Kynikos?