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japan

Affiliate Woes for Amazon.com Go Global

July 6, 2009 · 0 comments

Tax attorneys for Amazon.com must be working overtime these days…

This week, Amazon.com learned that it faced another affiliate challenge: in Japan. This time, however, rather than its affiliate sales program, the focus is on corporate affiliates for Amazon.com. The two affiliates in question are Amazon Japan and Amazon Japan Logistics, which, exactly as they sound like they would be, are responsible for sales and operations inside Japan.

The Tokyo Regional Taxation Bureau claims that Amazon.com’s US companies have been improperly booking sales income in the US for Japanese sales in order to avoid taxes in Japan. The Bureau has put Amazon on notice that it intends to try and collect back taxes of $119 million as a result of what it perceives as underreporting inside Japan.

Here’s the confusion: US companies that do business in Japan but don’t have a physical presence/branch office inside the country are not required to file Japanese tax returns. Amazon.com claims this is the case. But the tax bureau has determined that Amazon Japan and Amazon Japan Logistics have been acting as branch offices. As a result, Japan is seeking back taxes from the company through December 2005.

Amazon and its affiliates are currently in talks with the authorities: in other words, expect a settlement.

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Note to Tax Evaders: Don’t Hide Your Money in the Shed

March 15, 2008 · 0 comments

One of my favorite tax stories to come out of the BBC (yes, even more than the new UK budget) is the saga of Hatsue Shimizu and Yoshiko Ishii. The two Japanese sisters have been arrested for alleged tax evasion – the National Tax Agency in Japan is calling it the biggest ever case of its kind in the country.

Tax officials in Japan claim that Shimizu and Ishii hid almost 6 billion yen ($58 million) in cardboard boxes and paper bags at their home in Osaka. The money reportedly is an inheritance as a result of the death of their wealthy father in 2004. Rather than report the inheritance, authorities allege that the sisters reported a small fraction and hid the rest. Tax officials claim to have found most of the money packed away in fifty cardboard boxes hidden in a shed.

This I don’t get. I don’t quite understand the appeal of hiding nearly $60 million in a shed near my house (notwithstanding the mildew issues since I live not so far from a creek). Clearly, you’re not packing it up and shipping it off to say, Liechtenstein, but maybe a pair of nice shoes? A trip to Paris? But hiding it in a shed? For four years? No wonder they were caught.

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