Italian prosecutors are investigating e-commerce giant Amazon (AMZN) and three of its top managers over allegations of tax evasion totaling at least €1.2 billion, according to Corriere della Sera. The investigation, launched by Milan prosecutors and Italian tax police, focuses on Amazon’s Luxembourg-based division and its alleged failure to pay taxes on online sales in Italy between 2019 and 2021. This probe is a significant escalation of Italy’s efforts to crack down on tax avoidance by multinational corporations.
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According to reports, Amazon’s algorithm allowed non-European sellers, particularly those based in China, to sell goods in Italy without paying the required 22% value-added tax (VAT). Under Italian law, intermediaries like Amazon are responsible for collecting VAT from non-EU sellers. Interestingly, this investigation is the second tax evasion case against Amazon in Italy in just seven months.
Indeed, the previous case, filed in July, involved Italian police seizing €121 million from an Amazon division in the country. Amazon was accused of exploiting workers and evading taxes by using subcontractors to lower labor costs. The company allegedly maintained a competitive advantage over smaller businesses by using cheap labor and avoiding certain taxes. Nevertheless, Amazon has denied any wrongdoing and is cooperating with the investigation.
Is Amazon Stock Expected to Rise?
Overall, Wall Street has a Strong Buy consensus rating on AMZN stock based on 47 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 35% rally in its share price over the past year, the average AMZN price target of $268.91 per share implies 17.7% upside potential.
