Made Them An Offer
"Nice website you've got there. Shame if something were to happen to it."
Amazon and the Italian government have agreed that the online shopping colossus will pay €100m (£88.3m) in back tax for 2011 to 2015, after a year of arguing. In a statement to Il Messaggero (in Italian), the Italian Ministry of Economy and Finance (MEF) said that its relationship with Amazon was back on track, and that it …
Not necessarily. This is Italy, where the government just wants your money, and it wants it NOW. It does not matter if you're a criminal or not. You can settle these kind of issues out of court. And, as usual, if you have unpaid taxes worth 10 euros, you get to pay 1000 euros. If you have unpaid taxes worth 100 millions euros, you end up paying one million. This depends on the level (as in D&D) of your fiscal consultants.
"Correct" tax isn't that simple. How much of the money was earned through a foreign partner (Amazon Ireland or Luxembourg)? How much charity work can be offset against tax? It may be the case that charities using AWS get a reduced rate and that offsets tax. There are hundreds of ways that you can reduce your tax bill if you jump through the right hoops, so that the beancounters can ask how much tax you want to pay instead of ask how much tax you should pay.
It's just Italy is so cash-strapped, and there are so few coins left in people's pockets, they have to look also elsewhere - especially now there are general elections next March, and politicians have to shower their clienteles with money.
Moreover Italy is discussing a "web tax", and it may be better for Bezos and C. to cough up some millions today than a few billions tomorrow....
I'd say that those €800,000,000 that Amazon invested in Italy (if true*) and the 3000 jobs created** could explain at least partly the low taxes requested.
*Note: This caveat is always mandatory when quoting data provided by big companies. ;^)
**Note: See the first note, plus "as long as they aren't those shitty jobs that pay below minimum wage and that Amazon doesn't even recognize as employees".
Italian workers at Amazon went on strike a few weeks ago. Because of course they are very happy of the working conditions there.
Anyway "creating jobs" is different from "hiring employees" - and many of those jobs are probably logistics workers usually getting jobs using very creative techniques to keep their wages low and with very few rights.
While there has been some tax exemption for hiring employees, Amazon is using the usual loopholes to avoid paying taxes locally as most other big companies - in its case funneling money through Luxembourg.
Just the investment to build local warehouses makes a little more difficult for them to assert they have not a "local presence".
Employing people is an important benefit of having businesses in the economy. So is paying tax.
But let's not view employment as a charitable act. The workers have to work in return for their wages. Business shouldn't have to be paid or rewarded through tax breaks to employ people.
Especially when you need their work to become rich. It funny how some companies try to make people think it's an act of benevolence, while it's just business - you hire people when you need them, and fire them when you don't. You pay them because you earn more than you pay - when you don't usually you go bankrupt.
Tax breaks in exchange for hiring always shown a limited effect - companies exploit them, but the effect on employment is always lower than expected - companies never hire workers they don't need already.
The real issue, for example in a country like Italy, is the labour cost - because of the high taxation on it. It makes a worker expensive for the company, while the worker earn less. But it ensures others pay far less....
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