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4-20-2014 by Roger Chartier:

Amazon is losing on taxes!



Amazon had setup a good deal with Luxembourg

But things have changed...

The deal with Luxembourg was that the European business that Amazon was doing was being shifted through Luxembourg where the tax situation paid off big time for Amazon and paid off small time to the US treasury.

There is no tax on their earnings in that country.

A bunch of EU politicians  and possibly the IRS got up in arms about this and decided to step on Amazon's toes as far as this deal was concerned.

Amazon was leasing the rights to re-license it's USA owned technology to Luxembourg where they had a tax exempt deal.This Amazon group then resold software rights for an increase in price.

Twenty of the top economies are not putting up with this deal where there are corporate tax avoidances and profits get shifted into low or no tax situations.

Amazon says

That the way that they do this is straight up with the tax laws of the countries that they are doing business with, although those countries don't like it.

So now, the profit for the Amazon EU company called Amazon Europe Holding Technologies SCS is currently up from them to the US affiliates from what it was in 2012.

The Luxembourg accounts showed that In 2011 Amazon's Euro set-up paid out 229 million in Euros to the USA company affiliates, in 2012 It paid 408 million in Euros and in 2013 it was 420 million, but going back a few years, the US's IRS claims, in 2006 they should have received an extra $110,000,000 in cost sharing payments.  

There are a few other changes as well and they are most likely due to the pressure from the IRS. After all, Amazon doesn't like to lose money.

It has to pay as little tax as possible to satisfy the fiduciary responsibility to it's investors.

Those investors are concerned with long-term profits, as well.

So the game is played to win but the IRS is powerful and beating them is not always so simple for big companies... then again some are paying no tax at all.

Sales Tax in USA

A new twist as far as sales tax for Amazon's USA customers is concerned, states are changing the way the sales tax is collected and Amazon as of 2014 had to start charging it to customers in Indiana, Tennesee and Nevada.

This means that there are now 19 states that require sales tax collection. They represent the larger part of the US population.

Florida is going to start as well soon, and in 2016 South Carolina will require the sales tax collection.

The changes are happenning and states are trying to get Amazon to pay sales tax.

In the USA there are 45 states including DC that have a sales tax. The ones that do not have a sales tax and use taxes are Alaska, Montana, Delaware, New Hampshire and Oregon.

The "Use tax" means that if you bought the product online for personal use or a business use, the "Use Tax" would still be applicable in states where they have it.

As long as Amazon does not have affiliates in the state it feels that it should not charge it's customers a sales tax. I like that but ...nice try.