Amazon Case Study

Because the principle of supply underlies the GST legislation. It is the fundamental precondition for liability to arise from the legislation. The definition of a supply and the mutually exclusive concepts of taxable supply, input taxed supply, and GST free supply, provide the critical element in the application of the legislation.

They are head quartered in Seattle, Washington but their customer base has gone global. Recently, Amazon.com decided to pursue a lawsuit against the State of New York in response to a recently enacted statute that requires all out-of-state internet retailers, with no physical presence in New York, to collect sales and use taxes. Amazon.com is understandably questioning the constitutionality of this new legislation. “The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the Commerce Clause of the Constitution because it imposes tax-collection obligations on out-of-state entities (Bauman, 2008, May 2).” This case may be ruled unconstitutional, as it could be interpreted as a restriction on interstate trade. “Under federal law, a state can only require a business to collect sales taxes for it if the business has a physical presence in that state (Lee, 2008, April 21).” In spite of Amazon.com not having an actual entity or office in the state of NY, they do have affiliates whom reside there which could very well be the tax loophole the state of New York is looking for. In essence, this legislation is suggesting that any company advertising on website based in state other than its own could be forced to collect taxes. However, according to Tom Bergin, a spokesperson for the state Department of Taxation and Finance, “This is not a new law, this is just amending

Have you ever played monopoly? Not just the game Monopoly but the exclusive possession or control of something. Remind you of any company? Amazon. Amazon mostly cares about being on the top along with the other Tech Giants. Also, Amazon doesn’t care much about their workers and they’re allowing access for strangers to receive others information. Amazon is becoming too powerful!

Amazon the online retailer has been able to overcome the tax law issues by becoming more efficient and effective in their marketing approach. In the article, “Welcome to the Amazon” the author explains the prior advantage that Amazon enjoyed had being able to avoid sales tax for many years. Prior to 2013 this retail giant, “Previously, Amazon led internet retailers in maintaining tax-free sales by aggressively avoiding the creation of a "substantial nexus" with outside states. Amazon operated remotely, from at most a handful of states, engaged in entity isolation” (Tehrani, 2014, para.2). Based on this advantage, Amazon developed a large customer base that when this tax change occurred they were not affected very much because of their established

Amazon runs on four principles: “customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking” (https://www.sec.gov/Archives/edgar/data/1018724/000101872416000172/amzn-20151231x10k.htm).

An Economic Reforms Priority research report issued by the Grattan Institute dissects the possible benefits of tinkering with GST. It calculates that the GST-exempt goods and services equate to about 40 per cent of consumer spending, which means the government gives up about $30 billion a year in revenue. The institute recommends the GST be applied to all of these exempt goods, thus the additional revenue could fund substantial income and corporate tax cuts that would increase economic growth. This would raise an extra $31 billion a year in revenue and add $20 billion a year to the economy or an extra $870 a year income for everyone. The tax system would be far simpler for the Australian people.

Broadening the base of GST will also be compared to raising the rate of GST.

GST will reduce tax burden on producers and foster growth through more production. This double taxation prevents manufactures from producing to their optimum capacity and retards growth. GST would take care of this problem by providing tax credit to the manufacturer.

Large portion of the company is handled by other firms. Since Amazon.com relies heavily on shipping companies to deliver their product to the consumer, the shipping companies gain a large bargaining position. From an Industry environment perspective, the shipping channels are given far too much control over this critical portion of Amazon's business and are therefore placed in a powerful bargaining position.

One of the weaknesses that Amazon has would be their operational issue. Amazon is a big company and their operational issues should be considered a weakness. The reason why they could possibly have an operational issue can either be that they accidently or purposely overlooked the issue, or assumed that they will be fine and the plan would be successful. Either way, this issue could have been stopped. To big companies like Amazon, receiving a filing complaint should be common but it is not something they should get used to or else it can result in a decrease in reputation, revenue decrease, or even both. But there are some alternative solutions that can be considered.

It is hard to say whether the GST is favorable or adverse because the government hasn’t yet proposed the whole

Goods and Service Tax commonly known as GST has attracted most of the small scale manufacturing companies and business people to make the tax structure of Indian Economy more comprehensive.The taxation of goods and services in India has, been characterised as a cascading and distortionary tax on production resulting in mis-allocation of resources and lower productivity and economic growth. Therefore, it is necessary to replace the existing indirect tax system by a new system which would foster the achievement of the following objectives:

India has adopted dual GST instead of national GST. It has made the entire structure of GST fairly complicated in India. The centre will have to coordinate with 29 states and 7 union territories to implement such tax regime. Such regime is likely to create economic as well as political issues. The states are likely to lose the say in determining rates once GST is implemented. The sharing of revenues between the states and the centre is still a matter of contention with no consensus arrived regarding revenue neutral rate.

The introduction of GST is a single move enveloping all indirect taxes that will make country single unified common market. It is a destination based multipoint tax system covering in its ambit both goods and services. It is single tax on the supply of goods or service, right from the manufacturer to the consumer where credits of GST input taxes paid at each stage shall be available in the subsequent stages of value addition, thus, makes GST essentially a tax only on the value addition at each stage.1 Hence, the final consumer will bear only the GST charged by the last dealer in the value chain along with set off benefits at all the previous stages. All other indirect taxes will be abolished

By introducing GST into practice there would be amalgamation of central and state taxes into single tax payement. However, exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST.