Alibaba Group Holding Ltd Targeted By U.S. Retailers In Tax Loophole Fight

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Alibaba Group Holding Ltd (NYSE:BABA) seems to have replaced, Inc. (NASDAQ:AMZN) as the biggest enemy for traditional U.S. retailers. Many of the largest U.S. brick-and-mortar retailers have warned Washington that Alibaba would “decimate” the Main Street if Congress doesn’t close tax loopholes for online retailers. Notably, the Chinese e-commerce giant is yet to build a major presence in the U.S. market.

Traditional retailers scared of Alibaba

The Alliance for Main Street Fairness started running TV and radio ads on Sunday, calling on the U.S. government to end special tax treatment for online retailers like Alibaba. Members of the Alliance for Main Street Fairness include Best Buy, Target, J.C. Penney, and other chains. The coalition demanded that the Congress grant states more authority to tax online purchases.

The ad came just a day before Cyber Monday. Traditional retailers are struggling with falling sales as consumers turn to online retail companies. It’s a clear signal that the U.S. retailers are ready to play a hardball on Alibaba, and drag the Chinese giant into political conflict. Alibaba currently serves the U.S. consumers through its international platform AliExpress. Last month, Alibaba founder Jack Ma said that the company would soon launch the English-language version of its Taobao platform.

Alibaba rejects the U.S. retailers’ claims

The Chinese online retail giant handles more customers than eBay and Amazon combined. The company caught the attention of U.S. consumers after its record $25 billion IPO in September. This year, Alibaba launched a B2C marketplace called 11 Main in the U.S., which is similar to its Tmall platform in China. Surprisingly, Amazon has taken a U-turn, supporting the traditional retailers in their fight to close the perceived tax loophole.

On Monday, Alibaba rejected the U.S. retailers’ claims, saying that the ads were “not fact-based.” Alibaba pays its taxes according to the laws of the country where it does business, and the United States was no exception.

Alibaba shares tumbled 5.06% on Monday to close at $105.99.

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