How Amazon finds tax loopholes
Posted in: Government & Policy at 05/04/2012 18:18
Amazon's founder, Jeff Bezos, has always taken a keen interest in tax planning. From the beginning, loopholes were a key part of Amazon's ability to undercut rivals on price. When setting up the company, Bezos even considered basing it on an American Indian reservation near San Francisco to exploit state tax loopholes.
The world's largest internet retailer collects sales taxes from only five American states, exploiting a 1992 court ruling that US businesses without a physical presence - such as a shop or warehouse - in a state cannot be required to collect its sales tax. Amazon has a map of the US with each state coloured red, yellow or green. Executives travelling to red states need company permission before entering, in case their actions trigger laws that force Amazon to collect taxes there.