Japan orders Amazon.com unit in Seattle to pay Y14 bil in back taxes

Monday 06th July, 05:53 AM JST

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JeffLee at 08:18 AM JST - 6th July

Typical Japanese-style "journalism." How about getting a quote from Amazon? Let's hear its side of the story too. The reporter couldn't bother with a single phone call to their office?

Instead, we're treated to the government's version of events via some mysterious "sources." Kyodo often acts more like a gov't organ than a real independent news service.
OssanAmerica at 08:34 AM JST - 6th July

What's to ask of Amazon? Obviously their position is that they aren't branch offices and there's no permanent establishment.
JeffLee at 09:47 AM JST - 6th July

Ummm, Ossan, whether they plan to pay the tax or to fight it. Now THERE'S a news story...
tkoind2 at 09:56 AM JST - 6th July

I think it will be an expensive and pointless battle for the J-Tax guys as the rules in effect in the US will govern how this works and not what Japan decides. International online sales do not typically end up with taxes in the country that the buyer is in, unless they have a local office. Since Amazon Japan's offices are locally owned and the sales in question direct to the international branch, I believe the treaty laws will come down on the side of Amazon and Japan will simply waste money chasing this.
tkoind2 at 09:56 AM JST - 6th July

Why don't they go after the corrupt companies here instead?
OssanAmerica at 10:05 AM JST - 6th July

Ummm, Ossan, whether they plan to pay the tax or to fight it. Now >THERE'S a news story...

Do you honestly think that Amazon is going to just "pay" the equivalent of 147 million US dollars? Especially when arguments can be put forth because of the bilateral tax treaty? You're not a business person, are you.
GW at 10:34 AM JST - 6th July

gee wonder if the J-taxoffice will check the likes of Honda, Toyota or Canon for similar set ups, you can bet they too have set up their offices & ownership to minimize their taxes as well.

If push comes to shove in this case my bet is amazon in the usa just sets up their j-language web outside Jpn & just go back to shipping direct to Jpn instead of keeping stock in Jpn etc
mindovermatter at 10:57 AM JST - 6th July

Good Luck Japan!

You won't see one 10 Yen coin!
Samuraiiki at 11:19 AM JST - 6th July

Humm.. ZZZZZZ.... (Yawn) Wake me up when they are ready to send the money.
gogogo at 11:28 AM JST - 6th July

The japanese tax department are too much, they came into my previous company banging desks and claiming money laundering, after 1 week of "checking" they left not finding anything wrong and not even saying sorry, this cost the company a large chunk of money to get accountants in and have them work for a week not to mention they took up all the meeting rooms. They came back 6 months later and did the same thing, found nothing. They have too much power and think they are the king or something.

The tax department will jump on any company making money, it was so bad that we couldn't transfer money between companies (even with paperwork) because the tax department came in and said "nope we don't care what this paperwork says, you're money laundering".... go figure
kwatt at 11:34 AM JST - 6th July

Amazon Japan should simply pay taxes as long as merchandise goods are sold to customers in Japan. I just wonder Amazon KK are paying 5 percent consumption tax to Japan?
goodDonkey at 01:59 PM JST - 6th July

I don't know what you all think a "Japanese wholly-owned subsidiary" is but it is nothing more than an oxymoron. A subsidiary by definition is under a parent company that owns a controlling interest. Wholly owned, not a business-legal term I am quite sure, implies that Amazon has absolutely no control over that entity except by contractual relationships. It would appear to be more of a franchise relationship then that of a subsidiary. Of course it could be an error in the other direction. It could be a misnomer where wholly owned is a stock agreement where the company owners of Amazon Japan Logistics KK and Amazon Japan KK only own stock, which would have to be an extremely unique stock, that is actually Amazon issued stock. That would be so stupid of the Japanese owners because they would lose the liquidity status that Amazon common stock would carry but still tie up the funds without control. I cannot even envision how this could legally be accomplished. It would be simply constructed to evade taxes.

The bottom line is either it is a subsidiary or not. It is very easy to determine. Are Amazon Japan Logistics KK and Amazon Japan KK abiding by a contract and free to make decisions as they wish outside the terms of that contract or does Amazon have sole authority over the business decisions of Amazon Japan Logistics KK and Amazon Japan KK. If as I suspect Amazon Japan Logistics KK and Amazon Japan KK are actually independent companies and simply operate under an exclusive contract with Amazon then they owe taxes on the pure profit. If Amazon Japan Logistics KK and Amazon Japan KK have what would amount to a bond or loan arrangement, meaning Amazon has the ultimate power to make all decisions but did not pay for any portion of the companies in question, then they should not have to pay taxes because they actually don't own the profit it would always be determined by Amazon what they would get. For anyone dumb enough to accept a relationship like that, paying no tax on the profit would be of little consolation. But in my opinion it is far more likely they are attempting to pretend they have such a relationship. I would bet the wholly owned part of the oxymoron is the correct part. They are probably in what would be known as an exclusive agent relationship. If so, pay your taxes!
goodDonkey at 02:45 PM JST - 6th July

I am a bit confused as to status of Amazon Japan Logistics KK and Amazon Japan KK as a Seattle based affiliate. What kind of taxes does Honda, Toyota and other auto plants in the U.S. pay as far as taxes go? I think those tax laws should be the applicable ones and not those of a U.S. subsidiary. Well actually it should be the tax laws on a Japanese owned business located in the U.S. if Amazon Japan Logistics KK and Amazon Japan KK only reside in the U.S. Does Amazon Japan Logistics KK and Amazon Japan KK also reside in japan?

I need information!
apecNetworks at 05:03 PM JST - 6th July

I had an interesting conversation w/ a former employee of Amazon.com in the US. He said Amazon.com is more than what it seems, then more or less winked. Odd conversation, but this tax thing may be related.
stirfry at 05:12 PM JST - 6th July

if anybody knows how to avoid taxes, its definitely the japanese