Taxes on multinationals, for Amazon nothing or almost nothing could change. The new rules “grace” the colossus of Bezos

“I am very happy with the developments that have taken place in the last G7 of the finance ministers, because in reality what they have decided, that is a uniform approach to the taxation of multinational companies, that’s what we have tried to do long since”. They are the words with which Mariangela Marseille, Responsible for Italy and Spain by Amazon commented this morning on the agreement reached by the G7 economy ministers on the global minimum rate. Marseglia is right to be happy. By analyzing the texts, the organizations Fair Tax Foundation, Tax Justice Network e TaxWatch they discovered that the e-commerce giant could in fact come out almost unscathed from the tax crackdown that would be applied to multinationals. Just Amazon, whose stock market value in the last year has gone from 1,200 to 1.6 trillion dollars and whose revenues jumped 37% a 386 billion, thanks also to the lockdowns. Just Amazon that managed not to pay not even one euro in taxes for its Luxembourg subsidiary where many of the proceeds of the European divisions converge, for a total of 44 billion euros in revenues and over 2 billion in profits.

The devil is in the details and to understand why Amazon celebrates it is necessary to explain some technical aspect of the agreement. The agreement, which the OECD had been discussing for years, is based on two pillars. The first states that the 20% of the higher profit share al 10% of revenues becomes subject to taxation in the countries where companies operate. The “second pillar” instead envisages the principle of a minimum global tax rate of at least 15% on a country-by-country basis, thus eliminating the usefulness of shifting profits to tax havens.

It is al first pillar that we need to pay more attention. Its goal is to get multinationals to pay a share of the taxes in countries where they have a high volume of sales, regardless of whether their physical presence is modest. Let’s think for example of Facebook that in many European countries invoices billions despite having offices that limit themselves to managing marketing and the commercial part. There is a though. This principle only applies to companies that have a profit margin of more than 10%. Profit margin is what a firm actually earns relative to its revenues.

There are sectors, for example fashion, where this margin is usually very high. Others, such as the steel industry or low-end cars, where margins are much narrower. Does this mean that you earn money in some sectors and less in others? No, because the proceeds depend also by sales volumes. A € 2,000 bag can yield a lot but relatively few are sold. A steel mill has high costs and makes little money on a single supply of finished product but sells maybe 6 million tons.

Unlike Google, Facebook or Microsoft, Amazon has important physical structures: warehouses, means of transport, dependent armies. It has high costs and is a hybrid of the old and the new economy. Its 20 billion plus in profits made in 2020 depend on the fact that thethe volume of sales is gigantic (382 billion). However, the relationship between profits and revenues stops al 6,3%. It would therefore be excluded from the obligation to pay part of the taxes in countries where it has significant sales volumes. For example Italy, where Amazon has 40 sites and beyond 10 thousand employees. According to Mediobanca’s studies, the colossus of Jeff Bezos pay in our country just 11 million euros in taxes.

That the agreement reached in London in general is not particularly punitive for the giants of the web the satisfaction expressed by Google and Facebook also demonstrates this. The starting point was the proposal for a minimum rate of 21%, 15% was agreed, slightly above the levy applied today in countries such as Ireland (12.5%). The revenue at European level which, in the case of a 21% levy, would have been almost 100 billion euros (7.6 billion for Italy) with the bar lowered to 15%, it is reduced to 48 billion (2.7 billion for Italy). It is not very far from that 12.5% ​​of Dublin, where already today many multinationals domicile their European businesses.

The US administration of Joe Biden it had the merit of unblocking a negotiation that had been standing still for some time and above all due to US opposition. The scheme of the agreement, however, seems very careful not to penalize the US giants too much. Washington also demanded that, at this point, self-approved web taxes in countries such as France or Italy. The United States will be the main beneficiaries of the introduction of a global minimum rate.

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