Japan levies taxes on Amazon's Japan business-media

TOKYO, July 5 (Reuters) - Japanese tax authorities have told an affiliated company of Amazon.com (AMZN.O: Quote, Profile, Research) to pay some $119 million in taxes for unreported income in Japan over three years to the end of 2005, the Asahi newspaper reported on Sunday.

But the company said the taxation was inappropriate and asked tax authorities in the United States and Japan to discuss whether the firm properly complied with the tax code in the bilateral tax treaty, the newspaper added.

The affiliated company in Seattle, Amazon.com International Sales, has commissioned Amazon Japan and Amazon Japan Logistics to manage sales and logistic operations in Japan, while booking sales from its business in Japan back in the United States where it paid taxes, Asahi said.

But the Tokyo Regional Taxation Bureau has judged that Amazon's operations in Japan should be considered as having a 'permanent establishment (PE)', meaning their income should be taxed in Japan under the U.S.-Japan tax treaty, it added.

Officials from Amazon Japan were not immediately available for comments. (Reporting by Yoko Nishikawa; Editing by Jerry Norton)