It sounds outrageous that a big company does so much business and doesn't end up paying lots of taxes, maybe it's suspicious, but it's only a necessarily problem if you make some flawed assumptions about how the business works.
There are different theories about the social value of enterprise, but in general businesses are meant to reinvest revenue into developing the business, and only taxed on what is taken as profit, such as to be payed to shareholders. That this incentivizes direct reinvestment is a feature, not a bug. It's just that amazon takes this to an extreme in prioritizing reinvestment over profit.
Does Amazon also structure its operations to optimize its tax posture? Of course, they're obliged to as a publicly traded company.
Overall is this an optimal/fair situation? Probably not. But the problem is really an inevitable outcome of the way that tax laws are setup. Amazon's only major moral failing here is simply in being a large multinational, with an expansionist business model.
The argument is that your entire focus as a software / service business is growth (aimed at profitability for some undetermined future date). If your section or company is making a profit this represents a failure to utilise all of your resources for the purpose of growth.
As a multi-national there are various tax shenanigans you can play - that is up to governments to decide how to crack down on those. The unfortunate fact is that you need countries like Ireland on board who have benefited greatly from being very corporation tax friendly.
For technical hardware I can recommend geizhals.de over idealo.
>Amazon's product offering is also seemingly getting worse, lots of five-star rated products which feature obviously paid reviews...
For non food items, amazon are still one of the cheapest once you include delivery and interestingly, even with Amazon Prime Delivery in France, almost all items are cheaper in Amazon.de including paying the 5 euro shipping to France, so I order a lot from there too.
Looking at idealo.fr for me on all my items I bought in the last few months, they are the same price as what I paid, but are all 3 euro or more including shipping. So as a consumer, amazon is still pretty much the cheapest.
Ultimately, I could save buckets by just going to the shop, but that won’t start for me until Q3.
I'm buying less and less from Amazon recently. And I no longer "go shopping" to Amazon and just go there to check prices. I think other companies are catching up and I was surprised when my latest laptop was delivered from a traditional retailer (El Corte Inglés) in under two hours. Just to share some anecdata.
>I would love to boycott amazon, but its near impossible
Then they put Prime up to £80 a year and bundled a load of shite I don't want with it [chart music and crappy American telly]. So I only ever have Prime these days whenever I get offered the 99p for a month's trial.
What I find myself doing a lot now is looking up something on Amazon, reading the reviews and then, if it's under £20 and doesn't qualify for free delivery, I get it off eBay instead --where all the same sellers are selling all the same things, but usually with free postage.
I realise that's just swapping one tax-avoiding US megacorp for another. But, to be honest, I couldn't care less about how much tax big companies avoid paying. Fair play to them for 'socking it to the man'. Does anyone seriously think that, if they coughed up their fair share, the taxman would reduce what he bleeds off the rest of us?
Shipping, shipping, shipping. Amazon ditches shipping providers that provide low quality, with web shops you as the customer have to pray that the shop isn't using <insert name of logistics company that has a particularly moronic local agent here>.
Many German shops ship with DHL which is expensive but has somewhat consistent quality, a wide net of post offices and Packstation lockers where you can pick up stuff yourself and (at least to my knowledge) does not engage much in using shoddy contractors. Others however... are cheap for a reason and the reason is usually underpaid to outright enslaved staff, pressured so hard by ridiculous delivery quota that they count a "not at home" delivery within 5 seconds of ringing the bell and no one answering.
Friends of mine lived in a new constructed area and they had a hard time of getting packages from anyone but DHL for months because the other services always returned packages with "unable to find address". DHL has the advantage that they are connected with the national post service which means the cities and counties provide them with always fresh information about construction works, whereas the competition is stuck on sometimes months old data.
I prefer it for buying general stuff just because the delivery is fast and reliable and they have a good choice of items.
For important items though like my monitor, computer components, various electronics stuff where I can't risk getting a dodgy gangplug or whatever I use PCComponentes.
The flood of low-quality and even counterfeit items makes it pretty useless for buying electronic goods.
Here's my requirements list for stores I'll patronize: online presence, less than one week delivery, relatively cheap delivery, good selection of items, honest refunds UX, UI patterns that don't say "we're trying to fuck over our customers". Amazon has had all that for 10+ years when no other store would do it, and most stores still don't manage.
The majority of small businesses in my country refuse to do as little as a facebook page and are not accessible so I won't give them money.
For food delivery from supermarkets, I checked a few years back the delivery cost more than the food and they wouldn't ship heavy items.
Almost all other online stores I try to use rely on dark patterns to trick customers, either with fake prices, fake reviews, hidden shipping policies, hidden costs that only appear at the last step of the checkout, complex refund flows, etc...
I agree with the rest of your comment, yet calling for a boycott of a company that has reached a monopoly position in the US, and will do so soon in Europe (attained through labor rights abuses and union suppression, dirty accounting/law tricks, and lobbying (read: bribery)), is impractical and somewhat misguided. “Billionaires are a policy failure“ - this is a systemic problem and needs a systemic solution.
Apple wasn’t sued or fined and didn’t go to court, the ruling compelled Ireland to collect additional tax from Apple and Ireland was the one who went on and spent tax payer money on appealing the decision in the EGC.
Until last year the EU had zero involvement in healthcare and public safety, that was every nation's own private garden.
But it reported a 1.7B loss in Luxembourg. So where are the profits going? Reinvested in the business?
E.g. Amazon Cayman Islands licences its branding etc to Amazon Luxumbourg which basically has to pay an exorbitant amount for it, enough so it's always in debt and therefore pays no tax. Of course, they're owned by the same company so money stays in the family but taxes are avoided.
As for retail - generally their retail segments start out unprofitable but eventually turn a profit. Amazon is in it for the super-long game, they didn't make an overall profit for 20 years and Bezos is against paying dividends to investors when the money could be reinvested.
My company made 0 profits and I have 100m in my tax haven accounts.
Of course this is a hyperbole but you get the point.
Treating them as rats in a labyrinth makes no sense when they're the main creators of the labyrinth.
Have you ever paid more than what you were required to?
Doing so is every bit as much of a conscious choice as pretending your blood testing product actually works or that the funds for Peter's ROI don't come from Paul
I mean, there are literally millions of companies worldwide that aren't even remotely tax efficient never mind inventing artificial royalties to shell companies in tax havens which they could if their directors wanted to... why are they not being sued by their shareholders?
Could it be because actual company law allows management an enormous amount of discretion in how they run the company, except in cases of obvious conflict of interest or failure to care? And not deploying aggressive tax avoidance strategies isn't considered to be conflict of interest or failure in a duty of care anywhere?
And you can definitely hate the player.
It's truly baffling to me that people don't see very clearly that Amazon is not the problem here.
>“President Biden has proposed a new, fairer system for taxing large corporations and digital companies but the UK has not come out in support of the reforms. The silence is deafening. The government must act and help to grasp this once-in-a-generation opportunity to banish corporate tax avoidance to a thing of the past.”
I’m unclear why Biden or the US applies in this case.
> but the UK has not come out in support of the reforms.
Oh, the irony :-))
I also think that this is very useful:
Tax avoidance is what Amazon does, and so should everyone else.
Having said that, I tend to agree with the thrust of your comment, that being: we should close, probably, close these avoidance avenues the for the ultra-wealthy. It's probably an intractable problem though, because the ultra-wealthy make the rules.
I am interested to hear why everyone should avoid taxes, that pay for the infrastructure and wealth of the general public.
I am really not advocating insane tax rates but you would think that persons or companies that profit extensively from the wealth of certain nations are willing to do their part in maintaining said wealth.
What about usage of our streets? Thousands of Amazon delivery trucks roll over them every day. They are not paid for by tax avoidance.
Besides all that I agree that especially the governments have to do a better job to avoid tax avoiders. A conscious customer is a nice thing but is too idealistic to solve anything and will never reach critical mass.
Politicians and bureaucrats spend other people's money spent on other people. Too right I'm only going to pay what's legally required of me.
Today, here in Australia, and I believe the story is smiliar in other wealthy nations, government spending needs more scrutiny in an effort to be more efficient, rather than more tax income.
Are you saying they broke the law? Because there is a distinction between evading and avoiding tax.
Category Net sales Operating expenses Operating income Margin
North America 236.3 227.6 8.7 3.7%
International 104.4 103.7 0.7 0.7%
AWS 45.4 31.8 13.5 29.7%
I added profit margins to show just how little profit they're making in the retail business, particularly in the international market. AWS is the profit machine.
I couldn't find a further breakdown of different markets in their 10-K. That might be because its difficult to assign expenses to the market for a single country.
I do however agree with you. There is a ton of companies that only survive because investors keep pumping money into them. If you can't turn a profit after ten years, then maybe your company shouldn't exist.
His salary is only $81,000 a year (and yes, it's tax deductible).
This puts things into perspective/scale.
The only answer, is that it isn't actually as low margin as commonly stated and instead we have a tax system with loopholes that allow businesses to make a "profit" but by "reinvesting" in themselves they don't have to pay any taxes.
There's no reason to think this gives any perspective.
Unless the article contains any details or hint whatsoever of undue deductions artificially depressing paper profits (it doesn’t) there’s absolutely no reason to find any issue in a company paying no profit taxes when it makes a loss.
Sales get taxed with sales tax, which Amazon paid in the EU in the billions like any other company.
I’m not absolving Amazon here but this article contains nothing damning.
Is the same thing going on here? Is Amazon unprofitable in Europe because it’s billing itself from another Amazon entity outside of Europe thus wiping out the profit?
It's like an article's headline states: Amazon stopped paying thousands of employees it hired last year.
Incendiary title, is Amazon perhaps breaking the rules?
And then you click on it and read that Amazon did not renew contracts of 10% of the employees it hired last year, and is therefore not paying them anymore as they're not working for Amazon anymore.
Which is normal business procedure, just like not having to pay taxes when you take a loss. And then the second question is, were the people fired illegitimately perhaps? Or did Amazon use a ta trick? Well who knows, the article doesn't mention a shred of evidence of it. That's why it's poor journalism.
I'm not absolving Amazon of any faults, it's obviously a company with many faults and issues and I would not be surprised if there's any more. What I am saying is that this article doesn't present any evidence of any faults, yet insinuates them. I tend to like reading the Guardian so it's a disappointment to see a lack of nuance or information.
Pointing out a company that plays by the government’s rules and minimizes tax obligations is a reliable mechanism to get people emotional and result in clicks.
It is funny to me, though, on a forum with otherwise “knowledgeable” or “discerning” people, that finance topics invite a considerable portion of forum members to disregard their skepticism and join in emotional manipulation of the article.
As opposed to learning what the causes for low tax liability are, discussing if it’s reasonable policy, and what changes to tax law need to be made, it’s just a bunch of comments screaming “tax evasion”.
What I’m saying is that the article contains no information at all on any dirty tricks being used, yet implies acting in bad faith.
That’s just bad reporting. If it’s not legitimate then point out in the article why, the reporter failed to do that.
Not paying profit taxes on a loss is the most normal thing in the world. Paying billions in salex tax (as Amazon did) on tens of billions in revenue, is also the most normal thing in the world. Where’s the issue? The article doesn’t clarify whatsoever.
Because if Amazon makes a loss on selling 44 billion € of merchandise, either Amazon is incompetent beyond belief or they engage in somehow-legal tax dodgery at the expense of European countries whose infrastructure they mercilessly wreck.
Simple logic leads to the latter explanation being more likely.
It's pretty much certain that Amazon's tax reporting is completely legal and above board. They cannot afford to not to. They are not your local tradesperson who is paid in cash and cooks the books. They are a massive, publicly traded company with all eyes on them at all times.
Simple logic would be to conclude that a US company with >$400 billion in revenue looking to take-over an EU market is going to make long-term investments that aren't profitable in the first years and generate losses on $40 billion of revenue in this new market.
There's nothing strange about that.
The article doesn't even mention your logic, nor provides any evidence for it, not even a specific allegation by expert opinion. That's why I think it's poor reporting. (I should not have said terrible reporting).
I'd be happy to receive arguments against Amazon's faults because I'm not an investor, not a consumer, not a fanboy, and concerned about the larger issues. But I want to see the facts.
Just by playing by the rules is not good enough?
When you do your taxes, don't you with your accountant try to pay as little as possible?
As a salary-earning individual, there's very little you can do to actually reduce your taxes by a meaningful amount, let alone down to zero like these corporations can.
It's true you can claim a lot as expense and register zero profits but only when you really don't have money.
People forget, Amazon gets its money from stock market - this money is someone's pension funds and savings, they are investing because people believe Amazon will one day then profit, they don't care about these losses.
So what's the alternative? Prevent people from investing into profitable things?
And it was more to demonstrate, does anyone pay more than they have to? Why do we expect businesses to act differently than how individuals do?
The trickier bit with revenue taxes is that businesses operating in ideally competitive markets naturally have very small margins over the long term anyway, so they (and their consumers) are penalised more than the oligopolies
I am not in favor of Biden’s proposal as it would only impact small companies or start-ups who can’t afford to employ teams of accountants only to report and pay profits in each country where they have sales. Look at the mess that the EU VAT reporting system is. It’s totally unattractive for small, honest businesses. Biden is basically proposing the same thing, only for corporate tax.
Look at the mess that dividend and capital gains taxes are for an individual investor in EU. Look at the mess that social and retirement systems are for an individual employee in EU. Who cares? One simply has to deal with them or their life is turned into misery.
> However, the system of corporate earnings taxation currently in force in Estonia is a unique system, which shifts the moment of corporate taxation from the moment of earning the profits to the moment of their distribution. In other words, earning profits in itself does not bring income tax liability, which arises only when earned profit is distributed to shareholders.
Sale -> VAT -> Corporate Tax -> Employment and social security taxes -> Dividend and capital gains tax
Also, it is weird that tax in english is used to describe VAT as well as employment/SS "tax", this is not the same thing (or at least it shouldn't be).
Some corporate tax, easely negated by going in debt, is necessary though.
If they made a loss they pay no taxes. I'm not supporting tax avoidance but this is totally basic stuff. Most likely amazon grows and invests their profits to open new sites like Sweden and it costs money.
So while Amazon Europe may report a loss in Europe, it certainly makes a lot of profit for Amazon Inc. (It's also helpful that foreign royalty income qualifies for a discount under US tax rules!)