Tue, Nov 13, 2012 - Page 15 News List

UK lawmakers to quiz three US firms on taxes

Reuters, LONDON

UK lawmakers were due to quiz executives of Starbucks, Google and Amazon yesterday about how they have managed to pay only small amounts of tax in Britain while racking up billions of dollars in sales.

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,” PAC Chairperson and Labour MP Margaret Hodge said.

“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 G20 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 corporate, or income, tax in the UK in the past three years.

The world’s biggest coffee chain paid only £8.6 million (US$13.74 million) in total UK tax over 13 years during which it recorded sales of £3.1 billion. Campaign group UK Uncut, which is opposed to government austerity measures and which has organized protests against British telecoms operator Vodafone and pharmacist Boots over their tax practices, said in a statement yesterday 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 Tory Alstead will give evidence to the committee, as will Google UK chief executive Matt Brittin and Andrew Cecil, Brussels-based director of public policy for Amazon, a PAC spokesman said.

Google’s filings show it had US$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 last year.

The company avoids UK tax by channeling non-US sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-US profits.

Amazon’s main UK unit paid less than £1 million in income tax last year. The firm had UK sales of US$5.3 billion to US$7.2 billion, filings show.

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

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

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