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Anti-Alibaba Ad Puts Tax Law in the Spotlight During Biggest Holiday Shopping Weekend

This past holiday shopping season showed a continued affinity for shoppers to buy online rather than in brick and mortar stores. Retailers have argued that ecommerce companies, and the consumers who buy from them, are able to profit from a sales tax loophole. Amazon.com had been the natural target for their attacks; however, this year, attention was paid to the Chinese company Alibaba.

The Alliance for Main Street Fairness, a retail coalition consisting of big brand name retailers like Target and Home Depot, ran an advertisement urging U.S. lawmakers to pass a bill that would prevent companies, like Alibaba, from enabling online shoppers to circumvent sales tax. The implication was that foreign companies would threaten the success of U.S. retailers if such a law were not enacted. Alibaba is uniquely positioned to be their target since it’s a non-American company that handles more ecommerce than Amazon and eBay combined.

Alibaba had made its mark in America’s consciousness as it became the darling of Wall Street with its strong earnings reports, a $25 billion IPO and a recent selling of $8 billion in bonds; but, the recent bad press may apply some pressure. Alibaba, in summary, responded to the contrary that it pays taxes according to U.S. law and it provides U.S. companies the opportunity to tap into the Chinese market through its online properties. The suggestion being that their retail presence is a win-win proposition.

As cultures become more globally interconnected and internet shopping continues to show borders are not an impediment, our generation continues to see the evolution of ecommerce unfold. I can’t help but wonder what the next generations will someday read in their history books and what brands will survive to that day.

Marc Fogarty, Audit Partner and a member of EisnerAmper's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

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