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How Amazon kept its tax bill low and rose to the top

Court documents reveal Amazon's long-standing and complex methods of carving out competitive tax positions, Newsweek's Simon Marks reported on Wednesday.

An employee secures customers' orders with bubble wrap before they are shipped at the Amazon Fulfillment Center in Tracy, Calif.
Fred Greaves | Reuters
An employee secures customers' orders with bubble wrap before they are shipped at the Amazon Fulfillment Center in Tracy, Calif.

Amazon's global headquarters in Luxembourg — and meetings with then-prime minister Jean-Claude Juncker — are at the heart of the cozy tax arrangement for the world's largest retailer, Newsweek reported. Juncker has denied taking a position on individual tax dossiers, but court documents uncovered a meeting between Juncker and with four senior Amazon tax officials, according to Newsweek.

Amazon's IRS case in the U.S. could force it to pay more than $1.5 billion in unpaid taxes, Newsweek said, after audits of Amazon's 2005 and 2006 tax filings. Still, Amazon told Newsweek that its corporate tax payments are based on the company's profits, which have been low: "Amazon pays all the taxes we are required to pay in every country where we operate."

Amazon responded to CNBC, adding: "We've invested over €15 billion in Europe since 2010 and last year alone created over 10,000 new jobs, bringing our direct employment in Europe to over 40,000 people. Finally, we disagree with the IRS position and are contesting the matter."

The e-commerce giant's case is not unusual and gets at the core of a heated political issue both in the U.S. and abroad. Indeed, companies like Apple and Facebook have also faced scrutiny and stirred controversy with their corporate tax schemes.

In related news, Amazon said that the company's July 12 Prime Day was the biggest for sales in its history.

For Marks' complete coverage, see the full story at Europe.Newsweek.com.