Tomahawk, WI 11/07/2013 (BasicsMedia) –, Inc. (NASDAQ:AMZN) faces numerous battles that it has to fight simultaneously in order to retain its share of the market. It collects a lot of revenue from different products, but this is yet to translate to profits. The company is just one of the many global tech firms that operate their online ad sales operations in countries such as Iceland, whose taxes are low. Lately, it appears that this practice could end. AMZN is not the only tech firm that faces a period of great uncertainty on how to handle the taxation issue and avoid paying more than it needs to.

EU Authorities Targeting AMZN

AMZN is just one tech firm that is targeted by politicians and EU authorities regarding their decision to establish their operations in countries where taxes are low. Politicians and other relevant authorities in Europe and other similar locations, believe that this practice is not good and should stop all at once. The concern raised due to such practice is that they deny other countries the revenue needed to grow their economies. The authorities opposing this arrangement opine that AMZN is the only beneficiary, but local companies and governments lose a great deal.

AMZN has great responsibilities that it must fulfill to its investors, before anything or anyone else. This makes it easier to understand why it opted to locate its online ad sales offices in such countries. It felt that it needed to lower its costs and one way of doing this was by locating its ads sales offices in such countries, where they would not be asked to pay huge amounts in taxes. This decision has benefited AMZN a great deal. Other tech firms have reaped billions over the years by hosting their ad sales offices or operations in nations such as Luxembourg and Iceland.

AMZN Seeks to Avoid Direct Taxes

Some parliaments across the world have tried to beat this practice by imposing direct taxes on tech firms such as AMZN. The policy failed to work in the past, but I foresee their success in future owing partly to the fact that a cross section of governments are working together. In the past, a single government or country tried pursuing such a goal, and failed miserably. Now that more countries in various jurisdictions such as Europe are working together, I think they stand a good chance of forcing AMZN and other tech firms to rethink their strategies on tax issues.

AMZN has saved close to $2 billion in taxes through this policy. The company has used this large amount of money on other ventures, but governments feel that AMZN still owes to them. Is it possible for AMZN to win this battle? I think AMZN must start looking for other ways of saving money. This policy has helped AMZN to reduce its tax burden even in the U.S, but things may be about to change. Cost cutting is a good idea and AMZN should insist on it at all times. In the same way, AMZN must fulfill its responsibilities to the governments around the world.

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