Just this January, Amazon outperformed Microsoft as the most valuable company consequently giving its founder, Jeffrey Bezos, the title of the richest man in the world. With Bloomberg reporting a whopping market capitalization of $797 billion and a net worth of $233 billion in 2018, people expected that the company is paying its weight in taxes.
However, it has come to light that it paid $0 in income taxes last year, according to Vox. For the second consecutive year, Amazon will be sending a $0 check to the Internal Revenue Service (IRS), Fortune says.
The policies behind it
The e-commerce platform brought in a profit of $11 billion (from $5.6 billion in 2017) in the past year, bringing the amount to literally zero. This happened because of the current tax policies giving a different tax treatment to companies that offer stock-based compensation.
Moreover, Vox explains that the company is able to funnel funds towards research and development, allowing it to avail the R&D tax credit. It is also able to take advantage of President Trump’s bill, which gives companies the liberty to have a 100% subtraction when they invest in equipment. This makes its $0 tax perfectly legal, as per Vox.
Meanwhile, Fortune reveals that Amazon ‘has a history of avoiding’ a variety of taxes in sales. Aside from these credits, Amazon also filed a $129 million rebate for its 2019 federal income tax, which actually pegs its rate at -1%. Additionally, the company convinced Mayor Jenny Durkan of Seattle to repeal taxes that had the potential to aid the homeless.