When Donald Trump, U.S. Republican Presidential Candidate, says something outlandish the World’s media pay attention. Yesterday, during an interview on Fox News Trump stated that Amazon, the biggest Internet retailer in the World, has “a huge antitrust problem.” Donald also expressed his belief that Amazon’s boss, Jeff Bezos, is using the newspaper he owns (the Washington Post) to influence politicians in Washington to help Amazon’s tax situation. His exact words were: “This [Washington Post] is owned as a toy by Jeff Bezos, who controls Amazon. Amazon is getting away with murder tax-wise. He’s using the Washington Post for power so that the politicians in Washington don’t tax Amazon like they should be taxed. He thinks I’ll go after him for antitrust. Because he’s got a huge antitrust problem because he’s controlling so much, Amazon is controlling so much of what they are doing.”
Amazon are yet to comment, which one could argue is often the best practice when Donald Trump speaks out against you. However, a trend we have witnessed in the last few years is how large, multinational businesses use a number of different techniques in order to avoid tax. In some cases, American businesses have taken over an overseas competitor in order to move their headquarters to another country and so benefit from a cheaper corporate tax regime. There are also rumours and stories of how businesses will arrange special dispensation to avoid paying a high headline tax cost. Examples include how a business might agree to pay for a given piece of infrastructure or pay for a government scheme in exchange for a reduced tax bill. In some cases, these alternative ways to handing over millions of dollars worth of taxes is beneficial to both the government and the business – but let’s not forget that most businesses are managed and run in order to make a return for shareholders and not to pay taxes. It’s in their interests to reduce their tax bill.
Amazon’s control of their business and in some respects of their markets is well documented, but this is a business that has grown from mostly being an online bookseller twenty years ago to a huge Internet shopping business with a stock market valuation of approximately $350 Billion. Amazon has evolved and changed very quickly, much faster than business regulators and tax collectors can keep up. Donald Trump likely has a point, but the world arguably needs solutions rather than fist shaking claims.