Amazon.com 2015 Annual Report Download - page 22

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• quarterly variations in operating results;
• fluctuations in the stock market in general and market prices for Internet-related companies in particular;
• changes in financial estimates by us or securities analysts and recommendations by securities analysts;
• changes in our capital structure, including issuance of additional debt or equity to the public;
• changes in the valuation methodology of, or performance by, other e-commerce or technology companies; and
• transactions in our common stock by major investors and certain analyst reports, news, and speculation.
Volatility in our stock price could adversely affect our business and financing opportunities and force us to increase our
cash compensation to employees or grant larger stock awards than we have historically, which could hurt our operating results
or reduce the percentage ownership of our existing stockholders, or both.
Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business
We are subject to general business regulations and laws, as well as regulations and laws specifically governing the
Internet, e-commerce, electronic devices, and other services. Existing and future laws and regulations may impede our growth.
These regulations and laws may cover taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile
communications, electronic device certification, electronic waste, energy consumption, environmental regulation, electronic
contracts and other communications, competition, consumer protection, web services, the provision of online payment services,
information reporting requirements, unencumbered Internet access to our services or access to our facilities, the design and
operation of websites, the characteristics and quality of products and services, and the commercial operation of unmanned
aircraft systems. It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy
apply to the Internet, e-commerce, digital content, and web services. Jurisdictions may regulate consumer-to-consumer online
businesses, including certain aspects of our seller programs. Unfavorable regulations and laws could diminish the demand for
our products and services and increase our cost of doing business.
We Could Be Subject to Additional Sales Tax or Other Indirect Tax Liabilities
U.S. Supreme Court decisions restrict the imposition of obligations to collect state and local sales taxes with respect to
remote sales in the U.S. However, an increasing number of states, and certain foreign jurisdictions, have considered or adopted
laws or administrative practices that attempt to impose obligations on remote sellers and online marketplaces to collect taxes on
their behalf. We support a Federal law that would allow states to require sales tax collection by remote sellers under a
nationwide system. More than half of our revenue is already earned in jurisdictions where we collect sales tax or its equivalent.
A successful assertion by one or more states or foreign countries requiring us to collect taxes where we do not do so could
result in substantial tax liabilities, including for past sales, as well as penalties and interest. In addition, if the tax authorities in
jurisdictions where we already collect sales tax or other indirect taxes were successfully to challenge our positions, our tax
liability could increase substantially.
We Could Be Subject to Additional Income Tax Liabilities
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations,
and administrative practices in various jurisdictions may be subject to significant change due to economic, political, and other
conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There
are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain.
Our effective tax rates could be adversely affected by earnings being lower than anticipated in jurisdictions where we have
lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in
jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into
new businesses and geographies and changes to our existing businesses, acquisitions (including integrations) and investments,
changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other
laws, regulations, administrative practices, principles, and interpretations, including fundamental changes to the tax laws
applicable to corporate multinationals. The U.S., the European Union and its member states, and a number of other countries
are actively pursuing changes in this regard.
Except as required under U.S. tax laws, we do not provide for U.S. taxes on our undistributed earnings of foreign
subsidiaries that have not been previously taxed since we intend to invest such undistributed earnings indefinitely outside of the
U.S. If our intent changes or if these funds are needed for our U.S. operations, we would be required to accrue or pay U.S. taxes
on some or all of these undistributed earnings and our effective tax rate would be adversely affected. We are also currently
subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us.
Developments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles, and interpretations
could have a material effect on our operating results or cash flows in the period or periods for which that development occurs,