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The BBC reports that the European Commission has reached a preliminary finding that Amazon has a tax deal with Luxembourg, a member of the European Union, that probably constitutes illegal "state aid."

According to the story, "The European Commission began a probe of the tax arrangement last year, saying that it had suspicions it broke EU rules ... Commission doubts over the Amazon deal included whether Luxembourg had properly looked into Amazon's 'transfer pricing' proposals about how money would be moved between different Amazon subsidiaries.

"Doubts also existed about whether the country had assessed that the proposed tax regime was in line with market conditions before agreeing the deal in 2003, the European Commission document said."

Both Amazon and the Luxembourg government have denied that they broke any EU tax rules.
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