Latest news about ethical consumerism


Amazon in court over $1.5billion alleged tax dodge

Feb 23

Written by:
23/02/2016 16:04  RssIcon

Internal Revenue Service seeking back taxes from internet giant 


Amazon are involved a court battle in the USA which could see them forced to pay $1.5 billion in back taxes, the Guardian reports.

The court case brought by the US Internal Revenue Service is shedding light on the company's opaque and complex structures which have allowed it to avoid paying a fair amount of corporation tax both in the UK and USA.


Project Goldcrest

During court proceeding details have emerged of a 28-step tax plan formulated by Amazon's tax team that was two years in the making. It was codenamed Project Goldcrest, after Luxembourg’s national bird.

The plan which came into force in 2006 sees money routed through a maze of subsidiaries most notably in Luxembourg and consists of a variety of inter-company agreements.

According to court documents seen by the Guardian US authorities have described the arrangement as “legally baseless”.

IRS assessment

This assessment comes from the IRS's expert witnesses and centres on complex inter-company contracts that transfer intangible assets – vital software, trademarks, marketing assets such as branding for its website – to one of its Luxembourg companies, a so-called “pass-through” entity not taxed in the Grand Duchy.

The IRS stipulates that any transfer pricing should establish a price that is market based, as if it were selling the service to a separate company.

According to the Guardian the IRS believes that Amazon used “unrealistically low values” to transfer its assets from the USA to Luxembourg, and its valuation of these assets was the “product of counterfactual and legally baseless assumptions”. They also attack Amazon’s subsequent justification of its methods as “arbitrary” and “plainly an exercise in futility”.


The Guardian also states:

"European investigators suspect Amazon has inflated royalty payments from one of its Luxembourg entities to another, in return for using the IP [intellectual property]. An arrangement such as this allows Amazon in effect to wipe out taxable profits."

EU tax authorities are set to rule on their Amazon investigation in the coming months but a preliminary finding suggested the company had benefited from state aid which is unlawful under EU law. 


Amazon spokesman: 

“Amazon pays all the taxes we are required to pay in every country where we operate”. “Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business. We’ve invested over €15bn 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.”

Amazon’s UK business paid £11.9m in tax in 2014, while its Luxembourg unit took £5.3bn from internet sales in the UK.

See more on our Amazon boycott campaign pages. 


This story has been added to our corporate database. The database powers all our live product guides, giving the score for each company on our rankings tables. Find out more about how we rate companies.







Full News Archive


Ethical news archive going back to July 2009.

Read More

Ethical Consumer Blog

Ethical Consumption in Japan

  • 24/10/2016 09:58

Rob Harrison attended an animal welfare conference in Toyko

Ethical Consumer Blog

Why I'm Boycotting the Brexit Backers

  • 21/10/2016 08:57

Still mad about Brexit? Then boycott the companieswho backed the leave campaign, says Simon Birch.

Ethical Consumer Blog

Journal of Consumer Ethics

  • 20/10/2016 10:01

New journal on ethical consumption

Ethical Consumer Blog

Ethical Consumer Conference

  • 18/10/2016 09:43

Yan, who attended the event, shares her experience

Ethical Consumer Blog

Cracked Campaign

  • 12/10/2016 10:09

Weekend of action against UKegg farming