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Amazon Avoids Tax on Profit of $11.2 Billion

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By Published On: February 18, 20190 Comments

According to a report from The Institution of Taxation and Economic Policy (ITEP), the US behemoth has used tax breaks and credits to avoid paying taxes for the second year running.

Despite profits soaring to US$11.2 billion in 2018, Amazon reportedly didn’t pay any federal income tax for the second consecutive year. In fact, by taking advantage of various tax breaks and credits, one of the world’s largest online marketplaces will actually receive a tax rebate of US$129 million.

In 2018, Amazon doubled its profits from US$5.6 billion to US$11.2 billion, with ITEP noting the company’s avoidance tactics.

“The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified ‘tax credits’, as well as a tax break for executive stock options,” the report said.

Amazon has been able to get away with this in the past because the US tax code lets businesses that lose money during the reportable period reduce their future taxable income. This has worked to Amazon’s advantage as the company has reported billions of dollars in losses in previous years, and its income from international markets is not subject to the US tax code.

In 2014, for instance, Amazon reported an annual loss of $241 million, after posting $3 billion worth of losses in its first eight years as a publicly-listed company. In its most recent annual financial statement, the company said it still has $1.4 billion in federal tax credits available to offset future tax bills.

The last time Amazon paid taxes was in 2016, when the company forked out $1.1 billion in federal taxes. Over the last two years, CNN has reported that Amazon has paid non-Federal taxes, including $533 million in state taxes and $1.3 billion in international ones.

Amazon’s tax avoidance has long been criticised by President Donald Trump, who has criticised the Jeff Bezos-operated company on Twitter, saying the business pays “little or no taxes to state and local governments”.

However, speaking to CNN, Senior Fellow at the Institute of Taxation and Economic Policy said that Amazon isn’t actually doing anything wrong.

“This is tax avoidance, not tax evasion,” he said. “There’s no indication of any wrongdoing, except on the part of Congress.”

Amazon is yet to comment on the matter.

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