Amazon.com Inc. has paid nearly ¥30 billion ($274 million) in corporate taxes in Japan over the past two years after changing its policy to book sales in the country, sources with knowledge of the matter said.
The Japanese unit of Amazon used to engage in online retailing with the help of outsourcing fees from its U.S. parent, basically avoiding any involvement in contracts with its partners here and thereby avoiding higher tax bills, the sources said Sunday.
But Amazon Japan G.K., which does not disclose earnings figures, started making contracts on its own after it was formed by the merger of the U.S. retailer’s logistics and sales units in Japan in May 2016, the sources said.
The main purpose was to expand operations and seize more business opportunities in Japan, the sources said. Making the local unit the main body for signing contracts will make it possible for Amazon to tap into highly regulated sectors, such as medical products.
In both business 2017 and 2018, Amazon paid more than ¥10 billion in corporate taxes in Japan and is expected to pay even more as sales headed for record levels in 2019, the sources said.
Amazon and other major digital companies have come under scrutiny for the way they prepare their taxes because they operate globally and can often choose to report sales in low-tax jurisdictions. Amazon entered Japan in 2000.
In a related development, there have been active discussions on digital taxation in many countries and at an international level, although the United States, which is home to a large majority of tech giants, is opposed to the idea.