International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

This week in tax: Amazon hearing and Amgen lawsuit

Gavel of judge with coins against European Union flag

Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.

The Court of Justice of the EU heard the European Commission’s appeal in its tax dispute with US technology company Amazon yesterday, March 16.

If it loses the case, Amazon may face a bill of back taxes of €250 million ($265 million) to Luxembourg.

The European Commission claims the US company operated a Luxembourg tax structure called ‘Project Goldcrest’. Luxembourg granted Amazon a competitive advantage by allowing it to channel European profits to a holding company that paid no taxes on almost three quarters of those profits, the Commission says.

In return, Amazon invested in Luxembourg, the Commission argues. The company’s legal team disputes the Commission’s characterisation of its Luxembourg tax arrangement as a breach of EU state aid law.

The European General Court ruled against the Commission in 2021.

Amgen faces lawsuit over $10bn tax bill

US pharmaceutical company Amgen failed to notify investors that the group may be hit with a bill of more than $10 billion in back taxes and penalties in a dispute with the Internal Revenue Service (IRS), according to union pension fund Roofers Local No.149.

“Defendants failed to take any meaningful accrual or otherwise reveal the staggering amount of back taxes and penalties claimed by the US government,” said Roofers on Tuesday, March 14.

Roofers alleges that the company’s share price fell by 6.5% on August 4 2021 and 4.3% on April 28 2022. The pension fund argues this is because Amgen did not disclose its potential tax liabilities.

CEO Robert Bradway and CFO Peter Griffith are also defendants in the case. Amgen is reviewing the claims against the company.

Meanwhile, the tax dispute with the IRS that led to the lawsuit is still unresolved. Amgen is facing a $10.7 billion bill in back taxes and penalties in a court battle with the IRS, which claims the company underreported its US taxable income by nearly $24 billion from 2010 to 2015.

Amgen did so, according to the IRS, by allocating profits to a Puerto Rican manufacturing subsidiary. But the company denies any wrongdoing.

The court case is Roofers Local No. 149 Pension Fund v Amgen at the US District Court for the Southern District of New York, No.23-02138.

Italy pursues corporate tax reform

The Italian government announced its intentions to overhaul the tax system to reduce corporate tax and crack down on tax evasion yesterday, March 16.

Prime Minister Giorgia Meloni wants to overhaul the tax code and implement a new single flat income tax rate and reduce the corporate tax rate from 24% to 15% by 2027. She also wants to close tax loopholes and abolish 600 tax deductions from the system.

The Italian government hopes to crack down on tax evasion and close the so-called tax gap to recoup up to €8 billion ($8.49 billion) more tax revenue in 2024 than the tax authority collected in 2019. However, tax evasion reportedly costs the Italian government an estimated €90 billion a year.

If the reforms go ahead, it would mean the biggest shake-up of the Italian tax system since 1971, when the existing regime was established.

UK CbCR requirements to launch on April 1

UK legislation to introduce master file and local file requirements as part of country-by-country reporting for large companies will come into force from April 1.

The UK government will also require companies to file a supporting summary audit trail as part of the new CbCR. This is intended to improve the transparency and consistency of transfer pricing documentation and facilitate the UK tax authority’s risk assessment and enquiry process.

HM Revenue and Customs stands to gain more corporate financial information from the filing requirements.

Next week in ITR

ITR will be following up on its recent coverage of OECD discussions about the two-pillar solution, as well as the UK budget plans to raise corporate tax and implement a 100% ‘full expensing’ regime.

We will also be taking a closer look at updates from the tax authorities in the US and Australia.

Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.

more across site & bottom lb ros

More from across our site

The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
The OECD’s rules may be impossible for businesses to manage, according to tax experts from companies including Shell.