Taxing AmazonPosted: September 7, 2011
Richard Fletcher asks in today’s Telegraph, “Is the tax trap closing on Amazon, eBay and Google?”
Clearly, Amazon is having a hard fight in California, where the legislature is finally growing tired of internet businesses enjoying the legal right to avoid charging sales tax.
Fletcher goes on to highlight Amazon’s unusual position in Europe, where all its national entities function as “service companies” to a Luxembourg base. Luxembourg has very low rates of corporation tax (by European standards) and also very limited requirements for information disclosure. This gives rise to the absurd situation whereby the biggest bookseller in the United Kingdom makes no meaningful return to Companies House, and carries a significantly lower overall tax burden, compared to indigenous retail businesses.
Jeff Bezos hasn’t added his voice (as far as I know) to those successful Americans (cf Warren Buffett, Eric Schmidt) demanding more equitable taxation for large corporations or for the individually wealthy, and Amazon has fought federal and state tax collectors practically since its inception. Amazon has argued – with perfect legal justification – that their business model is not aligned with established taxation structures, but – as Fletcher concludes:
…the likes of Amazon, Google and eBay are no longer the loss-making start-ups they once were, but are now among some of the largest companies in the world.