Amazon discloses Canadian taxes for the first time

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Amazon.com Inc. AMZN-Q has revealed the total direct taxes the global tech giant incurred in Canada for the first time, saying Thursday that it spent $431-million in payroll and corporate taxes in 2021.

The company has historically disclosed its tax payments for just a handful of countries, generally sticking with the disclosure rules of a given jurisdiction. Canada does not traditionally require such public disclosures. But Amazon’s tax strategies have long attracted attention, as it has often sought out tax and cost incentives from jurisdictions when it looked for places to plant roots.

In recent years, the Organization for Economic Co-operation and Development has been pushing for the world’s biggest companies to more fairly distribute their corporate tax income to jurisdictions where they operate. In 2022, a Globe and Mail investigation found that Amazon had for years structured its Canadian retail business in such a way that certain profits could be booked in the United States.

That strategy required many senior retail employees to conduct minimal business in Canada, as they limited the amount of their time spent north of the border and signed any documents back on American soil. Amazon told The Globe last year that it no longer employed the exact strategy its reporters had found in an internal playbook, but did not clarify how its approach to profit and taxation in its retail division had changed.

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The figures the company shared in a blog post Thursday do not directly address how much corporate tax Amazon pays for its Canadian retail operations, which were the subject of The Globe investigation. The $431-million figure includes employer contributions to employment insurance, Canada Pension Plan payments, provincial health funds and workers’ compensation costs for its 40,000-plus employees in the country. These employer contributions, Amazon said, accounted for the “largest proportion” of the total direct taxes it incurred.

It also does not break down the taxes that were attributable to its different divisions, meaning it is impossible to separate how much was incurred by the retail operations versus the Amazon Web Services cloud segment – which in fiscal 2021 was responsible for US$18.5-billion or 74 per cent of the parent company’s global operating profit.

The Globe investigation found, as recently as in the past six years, the tech giant’s warehouse network in Canada was run by a B.C.-registered company called Amazon Canada Fulfillment Services while retail operations were led separately through a subsidiary at the head office in Seattle. Nothing The Globe uncovered suggested illegal practices, such as tax evasion, but the strategy could effectively shield one of Canada’s largest merchants from having retail profits taxed by Ottawa.

Amazon said in a blog post that a PricewaterhouseCoopers survey of 69 Business Council of Canada members found that the company’s 2020 tax payments in Canada “ranked in the top 20 of the survey respondents for taxes borne, and top 15 for taxes collected.” The survey that Amazon linked to did not disclose the respondents’ names, including Amazon’s.

With files from Temur Durrani.