Amazon Loses Tax Battle With Japan

In the ongoing and rapidly excalating Internet tax war, Japan's is the first government to win back-payment from Amazon.com(AMZN Quote).

Japan has been seeking $119 million in back taxes over three years, from 2005 through 2008, the Asahi newspaper reported on Sunday.

Amazon asked officials in the United States and Japan to reevaluate the bilateral tax code, but ultimately the Tokyo Regional Taxation Bureau ruled that Amazon's operations in Japan should be considered as having a "permanent establishment." As a result, it found that the company's income should be taxed in Japan under the U.S.-Japan tax treaty.

U.S. companies that conduct business in Japan without branch offices aren't required to file tax returns or pay taxes to the Japanese government. ...