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Global tax rules may not apply to Amazon

Although the Group Seven wealthy nations may support the plan that the world’s biggest companies pay a minimum global tax rate, the US tech giant Amazon may just escape this tax slab.

The objective of the landmark deal is to stop multinational shopping giants from opting for countries with low corporate tax rates where they earn more profits instead of paying where they carry out the business.

Through the plan, the minimum tax rate of 15 per cent without exceptions will leave the multinationals with less incentive to go through complex efforts to shift where they pay taxes.

The second pillar of the plan will allow countries to tax a share of the profits that the most profitable companies in the world will earn, regardless of where they are based. However, it is important to note that this plan applies to companies with profit margins exceeding 10 percent.

This plan will impact around 100 top companies including US tech giants such as Facebook and Google, but experts say that Amazon will be exempted of these rules. This is because Amazon earned a profit margin of only 6.3 percent last year in spite of its massive footprint and market capitalization of more than $1 trillion.

Sources say Amazon would not fall under the provisions, which would allow countries to tax a part of its profits.