Starbucks, Amazon and Google to face MPs over tax

LONDON Mon Nov 12, 2012 1:51pm GMT

1 of 2. Customers leave a Starbucks coffee kiosk in the financial district of the City of London November 12, 2012.

Credit: Reuters/Chris Helgren

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LONDON (Reuters) - Politicians will quiz executives of Starbucks, Google and Amazon on Monday about how they have managed to pay only small amounts of tax in Britain while racking up billions of dollars worth of sales here.

The Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, has invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.

"It is hard for the ordinary person to believe it's fair," said Margaret Hodge, a member of parliament for the opposition Labour party and chairman of PAC.

"It makes people incredibly angry in the current fiscal climate," she added, in reference to the austerity measures which large budget deficits have forced on the UK, and other countries.

Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes.

A Reuters report last month showed that Starbucks had paid no corporation, or income, tax in the UK in the past three years.

The world's biggest coffee chain paid only 8.6 million pounds in total UK tax over 13 years during which it recorded sales of 3.1 billion pounds.

Campaign group UK Uncut, which is opposed to government austerity measures, and which has organised protests against British telecoms operator Vodafone and pharmacist Boots over their tax practices, said in a statement on Monday that they planned to target Starbucks.

Starbucks said it followed the tax rules in every country where it operates and sought to pay its fair share of taxes.

"We are committed to being transparent on this issue and look forward to appearing before this committee," a spokeswoman said.

Starbucks Chief Financial Officer Troy Alstead will give evidence to the committee, as will Matt Brittin, Chief Executive Officer of Google UK, and Andrew Cecil, Brussels-based Director of Public Policy for Amazon, a PAC spokesman said.

Google's filings show it had $4 billion of sales in the UK last year, but despite having a group-wide profit margin of 33 percent, its main UK unit had a tax charge of just 3.4 million pounds in 2011.

The company avoids UK tax by channelling non-U.S. sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-U.S. profits. Amazon's main UK unit paid less than 1 million pounds in income tax last year. The company had UK sales worth $5.3-7.2 billion, filings show.

Amazon avoids UK taxes by reporting European sales through a Luxembourg-based unit. This structure allowed it to pay a tax rate of 11 percent on foreign profits last year - less than half the average corporate income tax rate in its major markets.

Google declined to comment. Amazon did not respond to requests for comment.

Hodge and former financial services minister Paul Myners told the Sunday Telegraph newspaper that the government should consider a new revenue-based tax to ensure profits from UK sales didn't go offshore.

(This version of the story corrects the first name of Starbucks Chief Financial Officer.)

(Editing by Matthew Tostevin)

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Comments (4)
ukinvestor wrote:
Shame on Google: corporate tax-dodger

“Google achieved this by basing its operations for Europe, the Middle East and Africa in Ireland, which has a corporation tax rate of 12.5 percent, then reducing even its Irish tax liabilities by sending vast amounts of cash to Bermuda via a Dutch holding company”

This money should be funding public services like hospitals and schools, but Google would rather give it to wealthy executives and shareholders and has used every trick in the book to achieve that greedy goal.

Thus, ordinary working people like you and me end up paying higher taxes to make up the shortfall.

Nov 12, 2012 11:00am GMT  --  Report as abuse
Raymond.Vermont wrote:
Simple formula…

All territorial profits should be taxed at the territorial tax rates where that ‘profit’ was produced, created and originated.

Multinationals should present its territorial sales and territorial costs to the sales environment thay are operating within, and then be taxed upon the margins within the territorial sales centre.

You dont need to be a Prophet to see that is the fair trade way of doing things.

Nov 12, 2012 2:28pm GMT  --  Report as abuse
Raymond.Vermont wrote:
Starbucks, Amazon and Google to face MPs over tax

Its upto the politicians to stop the tax rape of western economies.

i.e Change the rules/laws to protect from Corporate fleecing.

Nov 12, 2012 3:30pm GMT  --  Report as abuse
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