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E.U. to Order Luxembourg to Collect Back Taxes from Amazon

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European Union officials will order Luxembourg to collect back taxes from the online retail giant Amazon, a source with knowledge of the decision said Tuesday, the latest in a series of moves where Brussels has sought to flex its regulatory muscle over Silicon Valley, reported The New York Times (US).

The decision, which will be announced on Wednesday, comes as European authorities consider a raft of proposals aimed at increasing the amount of tax paid by American technology companies. The regulatory push, combined with the prospect of tax reforms, has fueled accusations that the European Union is unfairly targeting the United States tech sector. E.U. officials have denied those claims.

It was not clear how much Luxembourg would be ordered to reclaim, according to the source, who did not want to be identified discussing information that was not yet public. Officials in Luxembourg and the European Commission, the European Union’s executive arm, declined to comment.

The ruling mirrors a similar order from the commission last year, directing Ireland to reclaim 13 billion euros, or $15.2 billion at current exchange rates, in back taxes from Apple.

The two actions have highlighted the heightened scrutiny faced by low-tax nations in the European Union. Those countries, critics argue, help multinationals funnel revenues from larger markets in order to lower their overall tax bill. Such behavior has infuriated larger countries like France, whose budgets have been squeezed in recent years.

The investigation into Luxembourg’s handling of Amazon was made public in 2014, and the commission issued a preliminary finding the following year. In it, it described how the retailer used subsidiaries in Luxembourg to reduce its overall tax obligations.

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