Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

India’s Goods and Services Tax (GST) collections hit a new high in February 2026, with gross revenue exceeding ₹1.83 trillion, marking an 8.1 percent increase over the same period last year. The surge has been largely supported by rising import-related tax revenue and stable domestic consumption across key sectors.

Strong Domestic Revenue Signals Economic Stability

Domestic GST collections grew by approximately 5.3 percent to nearly ₹1.36 trillion. Analysts attribute this rise to consistent consumer spending, stable business operations, and the expanding adoption of digital payment platforms. Improved tax compliance and structured electronic invoicing systems have also contributed to strengthening revenue inflows.

Import Tax Revenue Jumps 17.2 Percent

Import-based GST revenue recorded the most notable increase, rising 17.2 percent to around ₹47,837 crore. Experts point to higher demand for imported raw materials and India’s deeper integration into global supply chains as key factors behind this sharp growth. The increase in import duties has significantly bolstered the overall fiscal position.

Refunds Processed to Maintain Liquidity

To support business liquidity, the government disbursed approximately ₹22,595 crore in GST refunds, a 10.2 percent rise from the previous year. After accounting for refunds, the net GST collection stood at over ₹1.61 trillion, reflecting a year-on-year growth of roughly 7.9 percent.

Cess Revenue Shows Decline

While overall GST collections rose, cess revenue declined to nearly ₹5,063 crore from ₹13,481 crore in February 2025. Economists suggest that changes in consumption patterns and adjustments in the tax structure contributed to the drop in cess collections.

Digital Compliance and Fiscal Outlook

The continued growth in GST revenue highlights the strengthening of India’s digital transaction ecosystem and effective tax compliance measures. Authorities have been enhancing technological monitoring systems to curb tax evasion and expand the tax base. Analysts note that sustained GST growth supports fiscal balance, public expenditure programs, and infrastructure initiatives, though global trade volatility and geopolitical uncertainties remain potential risks for future revenue trends.

The government has indicated that efforts will continue to expand digital taxation frameworks, improve compliance, and ensure transparency to maintain stability in revenue collection across sectors.

India faces a narrowing opportunity to secure its place in an economy increasingly shaped by artificial intelligence, advanced computing, and control over critical technologies, according to the Economic Survey 2025–26. The report cautions that without swift and strategic action, the country risks remaining a peripheral player while global power structures are rewritten around AI capabilities.

The Survey argues that just as oil and steel underpinned economic dominance in the last century, the defining resource of the 21st century is “compute.” This includes not only high-end processors and graphics chips, but also the energy systems, data centres, and critical minerals required to sustain them. Nations that control these assets, the report notes, are gaining disproportionate influence over trade, innovation, and geopolitics.

Technology Rivalries Reshaping Global Power

The warning comes at a time of escalating competition between the United States and China, where technological leadership is increasingly outweighing traditional military strength. In this environment, the Survey says, economic resilience alone is no longer enough. Instead, India must aim for “strategic indispensability” — a position where it becomes so integral to global technology value chains that it cannot be easily excluded or replaced.

The report points to the United States’ active role in reshaping global tech ecosystems through export controls, licensing rules, selective alliances, and trade agreements. Washington-led efforts to build a trusted AI supply chain — spanning chips, energy, advanced manufacturing, data infrastructure, and critical minerals — are already redirecting global investment and innovation flows.

At the same time, the Survey highlights risks for emerging economies stemming from changes in global financial regulation and digital finance frameworks. These shifts could influence cross-border capital movement just as AI-driven investment becomes increasingly concentrated in a handful of technology-dominant regions.

Two Competing Models in the AI Race

According to the Survey, the global AI landscape is being shaped by two contrasting approaches. Advanced Western economies largely follow a top-down model dominated by a small number of hyperscale firms, frontier AI models, and heavily concentrated intellectual property backed by massive private capital. While powerful, this model is expensive and increasingly closed to late entrants.

By contrast, many developing and middle-income countries are pursuing a bottom-up strategy that emphasises decentralised innovation, strong public-sector coordination, and sector-specific AI applications built on public digital infrastructure. The Survey concludes that attempting to mirror the US or Chinese model would be unrealistic for India and could divert resources away from more effective pathways.

Instead, it describes a bottom-up approach as essential for India’s circumstances. This would prioritise practical AI use cases in healthcare, agriculture, education, finance, logistics, climate adaptation, and governance. Open-source technologies, shared public datasets, and domestic innovation networks should take precedence over reliance on large, proprietary AI systems.

India’s Untapped Advantages

Despite the risks, the Survey underscores that India enters the AI era with significant strengths. The country is among the world’s leading contributors to AI research and possesses one of the largest pools of technical talent globally. Recent international assessments rank India just behind the United States in workforce readiness and AI literacy.

Another key advantage lies in India’s vast and diverse data ecosystem. Its linguistic, geographic, and socio-economic diversity generates rich datasets with high potential value across sectors such as public health, agriculture, urban planning, and disaster resilience. With appropriate safeguards and governance, this data could become a powerful competitive asset.

A Narrow Window for Action

The Survey, however, is clear that these advantages will not translate into leadership without coordinated policy execution. It calls for accelerated investment in computing infrastructure, secure access to critical minerals, robust data governance frameworks, and institutions capable of supporting sustained innovation.

Failure to act decisively, the report warns, could leave India structurally dependent on foreign technology platforms for decades to come. The message is unambiguous: the window to shape India’s role in the AI-driven global economy is limited, and delay could carry long-term consequences.