SEC Filings

AMAZON COM INC filed this Form 10-K on 01/30/2013
Entire Document

Table of Contents

The components of the provision for income taxes, net are as follows (in millions):


     Year Ended December 31,  
     2012     2011     2010  

Current taxes:


U.S. and state

   $ 562      $ 103      $ 311   


     131        52        37   










Current taxes

     693        155        348   

Deferred taxes:


U.S. and state

     (156     157        1   


     (109     (21     3   










Deferred taxes

     (265     136        4   










Provision for income taxes, net

   $ 428      $ 291      $ 352   










U.S. and international components of income before income taxes are as follows (in millions):


     Year Ended December 31,  
     2012     2011      2010  


   $ 882      $ 658       $ 886   


     (338     276         611   










Income before income taxes

   $ 544      $ 934       $ 1,497   










The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows:


     Year Ended December 31,  
     2012     2011     2010  

Federal statutory rate

     35.0     35.0     35.0

Effect of:


Impact of foreign tax differential

     31.5        (8.4     (12.7

State taxes, net of federal benefits

     0.2        1.5        1.5   

Tax credits

     (4.4     (3.2     (1.1

Nondeductible stock-based compensation

     11.1        4.1        1.6   

Other, net

     5.2        2.2        (0.8











     78.6     31.2     23.5










Our effective tax rate in 2012, 2011, and 2010 was significantly affected by two factors: the favorable impact of earnings in lower tax rate jurisdictions and the adverse effect of losses incurred in certain foreign jurisdictions for which we may not realize a tax benefit. Income earned in lower tax jurisdictions is primarily related to our European operations, which are headquartered in Luxembourg. Losses incurred in foreign jurisdictions for which we may not realize a tax benefit, primarily generated by subsidiaries located outside of Europe, reduce our pre-tax income without a corresponding reduction in our tax expense, and therefore increase our effective tax rate. We have recorded a valuation allowance against the related deferred tax assets.

In 2012, the adverse impact of such foreign jurisdiction losses was partially offset by the favorable impact of earnings in lower tax rate jurisdictions. Additionally, our effective tax rate in 2012 was more volatile as compared to prior years due to the lower level of pre-tax income generated during the year, relative to our tax expense. For example, the impact of non-deductible expenses on our effective tax rate was greater as a result of our lower pre-tax income. Our effective tax rate in 2012 was also adversely impacted by acquisitions (including integrations) and investments, audit developments, nondeductible expenses, and changes in tax law such as the