Amazon's 'Project Goldcrest' revealed

Amazon's 'Project Goldcrest' revealed

The Guardian reports on disclosures made in the run-up to "a landmark court ruling" in the US, as the US Internal Revenue Service squares off against Amazon in a tax dispute in Seattle.

The newspaper reveals details of Project Goldcrest, which it describes as "an elaborate avoidance scheme" used by Amazon in dealing with its tax arrangements, details of which have come to light in the US case.

Project Goldcrest, named after Luxembourg's national bird, is described as "a complex 28-step scheme, which took more than two years to complete, and fundamentally reordered its global business in Europe using a maze of offshore entities and intercompany agreements". It is said to have been implemented by the company in 2005-6.

According to the newspaper, the IRS has criticised Project Goldcrest for depriving it of tax, and questioned the legality of methods used by Amazon to devise intercompany contracts that transferred intangible assets – software, trademarks etc – to one of its Luxembourg companies. The Guardian quotes the IRS as contending that Amazon used "unrealistically low values" to transfer its assets from the US to Luxembourg.  The US tax body is said to be seeking to recover $1.5bn in back taxes from the company, plus interest, dating back to when Project Goldcrest was implemented.

But Amazon is said to have vigorously contested the IRS's claims, saying: "Amazon pays all the taxes we are required to pay in every country where we operate."

The online giant told the newspaper in a statement: "Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low margin business. We've invested over €15bn in Europe since 2010 and last year alone created over 10,000 new jobs, bringing our direct employment in Europe to over 40,000 people."