Tax havens are a geopolitical nightmare, and transfer pricing is a legal accounting trick to get money into tax havens, writes *Tanya Rawal-Jindia
Amazon.com Inc. was brought to court by the US Internal Revenue Service (IRS) in 2017 for transfer pricing discrepancies. In 2005 and 2006, the multinational tech company transferred $255 million in royalty payments to its tax haven in Luxembourg, but according to the IRS these royalty payments should have amounted to $3.5 billion. This transfer pricing adjustment would have increased Amazon’s federal tax payments by more than $1 billion. Even for the U.S., a country with decent (although waning) infrastructure, the loss of this much cash in federal tax revenue is substantial. Take for instance the water crisis in Flint, Michigan — if the city’s estimated costs of $55 million to replace the pipes are accurate, then Amazon’s tax payments could have saved the 100,000 residents from lead poisoning 18 times over.