Roundup: Amazon tax-evasion case in Italy may be 1st of similar probes, experts say

Italy's battle to increase tax revenue without raising tax rates expanded last week to include U.S. online retailing giant Amazon.com, Inc., which Italian officials said underpaid its tax bill in Italy by at least 130 million euros (141 million U.S. dollars).

The probe follows on the heels of a similar investigation worth some 224 million euros into the activities of Google, the dominant online search engine, and experts told Xinhua additional similar cases were likely to emerge in the coming weeks and months.

In late 2015, Amazon reached a 318-million-euro settlement with computer and mobile device maker Apple.

"This is the dominant problem of this era," Francesco Tundo, a tax law expert with the University of Bologna, said in an interview. "How does a country calculate the tax obligations of a company when much of its revenue and expenses are digital and not clearly based in any one location?"

Tundo and other experts say the case of Amazon is a little less complicated than the cases involving Google or Apple because the company does have a solid, tangle product: customers use the Italian version of Amazon's web site to buy products that are delivered to them in Italy.

But the products may still be shipped from warehouses outside Italy, and the Italian subsidiary of the company benefits from name recognition and a shipping and information network developed over the course of years, mostly outside of Italy.

For its part, Amazon denies any wrongdoing.

"Amazon pays all the taxes we are required to pay in every country where we operate," the company said in a statement. "Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly-competitive, low margin business."

According to Carlo Garbarino, a tax law professor at Bocconi University in Milan, the problem will persist until the European Union (EU) can make a single legal standard that covers the entire 28-nation bloc.

"As things stand now, you have individual countries trying to resolve European problems," Garbarino said. "This will continue as long as each country has its own set of laws."

Tundo agreed. "Italy will most likely recover some money from Amazon in this case, but there are hundreds of cases with smaller companies that will never come to light," he said.

"When it comes to cases like this, by the time tax officials look into a past-due tax bill it's almost too late. It is much better to prevent the problem than it is to try to fix it after the fact," Tundo said.

The public prosecutor's office in Milan, where the Amazon case was filed, did not respond to requests for comments on the developments.

Tundo said the Amazon case was a civil proceeding and that it remained possible that tax officials could open their own separate, independent investigation into Amazon's tax obligations for the 2009 to 2014 period in question.

Amazon was founded in 1994, and the company has operated its own Italy-only site since 2010. Since 2013, the Italy site has been the country's largest online retailer. (1 euro=1.09 U.S. dollars) Endit