Amazon made $5.6billion in US profits last year – but reportedly paid absolutely nothing in federal income taxes.

The online retail giant's latest financial statement suggests that various tax credits and tax breaks for executive stock options are the reason behind the company paying zero tax in 2017, the Institution on Taxation and Economic Policy (ITEP) reports.

According to ITEP, Amazon reportedly US profits of $8.2billion but paid an effective income tax rate of just 11.4 per cent – protecting more than two-thirds of its profits from tax during the period.

Amazon made $5.6billion in US profits last year – but reportedly paid absolutely nothing in federal income taxes. Pictured, Amazon CEO Jeff Bezos

The company – owned by Jeff Bezos, who is the richest man in the world with a personal net worth of $108 billion - is also projecting a $789million one-time tax break it will receive due to the new tax law implemented by the Trump administration.

Although the corporate tax cuts came into effect on January 1, the law includes a grandfather clause for companies that have managed to defer tax liabilities from previous years, according to ITEP.

This means that instead of paying deferred taxes at the previous 35 per cent rate, Amazon gets a discounted rate of just 21 per cent – the source of the $789million windfall.

Amazon's global headquarters are located in Luxembourg – a tiny nation that the European Union has accused of giving illegal tax breaks to the company.

Amazon's global headquarters are located in Luxembourg (pictured) – a tiny nation that the European Union has accused of giving illegal tax breaks to the company

The company is also projecting a $789million one-time tax break it will receive due to the new tax law implemented by the Trump administration. Pictured, Bezos (right) and Donald Trump (left) at a meeting in June 2017

Now, Amazon is looking for a US city to build a second headquarters, a move which has prompted state and local governments to compete with each other by offering tax incentives.

'From a decades-long strategy of exploiting state sales tax loopholes to its ongoing 'HQ2' sweepstakes, Amazon's leaders have rarely turned down a chance to use the tax system as the source of their competitive advantage,' ITEP's Matthew Gardner said.

'The online retail giant has built its business model on tax avoidance, and its latest financial filing makes it clear that Amazon continues to be insulated from the nation's tax system.'

DailyMail.com has contacted Amazon for comment.