Google, Amazon face questions on tax

DAVID STRINGER
Last updated 08:48 13/11/2012
Reuters

Coffee giant Starbucks and online retailer Amazon, take a grilling from British MP's over their accounting and tax practices in the UK.

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British lawmakers on Monday accused major multinational companies of aggressive tax avoidance, amid calls by the UK government for a global crackdown on firms which seek to evade tax.

In sometimes bitter exchanges at a parliamentary committee hearing, legislators questioned Starbucks, Google and Amazon about the amount they pay to the UK government in taxation.

Lawmakers scoffed as Troy Alstead, Starbucks global chief financial officer, claimed that the fact the coffee giant had reported losses for all but one of the 15 years it has operated in the UK was down to poor performance - and not an attempt minimize its taxes in Britain.

"You have run the business for 15 years and are losing money and you are carrying on investing here. It just doesn't ring true," said Margaret Hodge, head of parliament's Public Accounts Committee.

Alstead acknowledged to the panel that its taxable profits in the UK are calculated after royalties paid to its European headquarters in the Netherlands have been deducted. He said that Starbucks had a special tax arrangement with the Dutch government covering its headquarters, but declined to give details.

"Respectfully I can assure you there is no tax avoidance here," Alstead told the panel.

Companies operating in Europe can base themselves in any of the 27 EU nations, allowing them to take advantage of a particular country's low tax rates.

Alstead insisted that Starbucks was not seeking to mislead investors or tax authorities about its performance in Britain.

"We are not at all pleased about our financial performance here. It is fundamentally true everything we are saying and everything we have said historically," he told the committee.

Last week, Britain and Germany called for the world's largest economies to do more to collaborate to fight tax evasion, particularly in online commerce.

Hodge told witness Andrew Cecil, public policy director at Amazon, that many people in Britain are angered over the low tax rates paid by the retailer.

"Your entire activity is here yet you pay no tax here and that really riles us," she said.

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