Amazon's first foray abroad came in 1998, when it bought online retailers in Britain and Germany and rebranded them Amazon.co.uk and Amazon.de. In 2000, it launched Amazon.fr in France.
At first it did little to integrate these foreign units.
But in late 1999 the UK unit's principal activity changed from "marketing and selling of books via the Internet" to "the provision of services to other group undertakings."
People shopping on Amazon.co.uk would now do business with a US unit registered in Delaware. There were similar changes at the German business. In effect, the fast-growing European units had become fulfillment operations just to distribute packages and offer customer support.
Amazon's accounts show the bulk of its overseas revenues were now attributed to the US parent.
That shift helped with a problem it faced at home.
By the end of 1999 Amazon's accumulated losses were so large - more than US$1 billion - its accountants would not let the firm recognize them as a tax asset, because it was unclear it could ever make enough profit to use them up. Bringing foreign profits home allowed Amazon to set them against US losses, so the company did not have to pay tax on overseas profits.
That changed in 2003, when Amazon started making a lot more profit in the US. There was a chance foreign earnings would now increase its global tax bill, because US corporate tax rates were higher than in other markets.
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