Amazon redomiciling its EU headquarters to Cyprus
The Covid-19 pandemic was the best thing that ever happened to Amazon, as a world forced to stay and even work at home drove soaring growth in online shopping, and companies moved to expand their cloud capacity (with Amazon Web Services, for example) to allow their workforces to work online from home.
But 2021 sees Amazon and other online monopoly and infotech giants from Facebook and Google to Microsoft casting an increasingly wary eye on governments looking to take them down a notch for having become too powerful, and for paying very low tax rates by shifting profits to low-tax jurisdictions.
Of course, these companies have long employed an army of lobbyists, with some of them even taking up quasi-governmental approaches to the situation. Take Microsoft, which has launched a United Nations representation office in New York and hired a diplomat to run European government affairs. At the same time, Facebook has even established a “Supreme Court” to oversee user complaints and other issues. In 2020, executives of Facebook, Microsoft and Alphabet were even invited as speakers at the annual security conference in Munich, together with presidents and prime ministers.
In 2021, as the heat from official quarters rises, particularly in the EU, Amazon makes its move, redomiciling its EU headquarters to Cyprus. The country welcomes the giant corporation and the tax revenue that will help it reduce its debt-to-GDP ratio of nearly 100%, having chafed at the heavy-handed treatment by the EU during the 2010-12 EU sovereign debt crisis. With a GDP of some $24 billion, the Cyprus economy equates to less than a quarter of Amazon’s non-US revenue.
As 2021 progresses, Amazon consultants “help” Cyprus to rewrite its tax code to mimic Ireland’s, but with even lower levels of corporate and other taxes, with the country’s leaders and its population happily in its thrall from the financial windfall and lower tax rates.
But EU regulators quickly get wise to what is going on and move against Amazon, forcing the company to change its practices, and forcing Cyprus and other EU countries to harmonise tax rules. The US and other countries also move against monopolies in 2021, as these companies are punished for their hubris.