UK lawmakers grill Amazon, Google on tax

TOM BERGIN
Last updated 10:08 01/11/2012

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A UK parliamentary committee has invited executives from Starbucks, Google and Amazon to answer questions about their tax practices, which allow them to make significant sales in the UK, but pay little tax there.

The Public Accounts Committee asked senior officials from the companies to address a hearing on November 5, but a spokesman said scheduling problems could mean the hearing might be held later in November.

He said none of the companies had declined to attend in principle.

Google said its representative, which the Committee identified as UK Managing Director Matt Brittin, would be travelling on this date and therefore would be unable to attend.

The company declined to say if Brittin would be available at a later date.

"We comply with all the tax rules in the UK," a spokesperson said.

Amazon and Starbucks did not return calls and emails seeking comment. Spokespeople have responded to previous inquiries about their tax affairs by saying the companies comply with tax rules in all the countries where they operate.

Earlier this month, Reuters revealed that Starbucks had paid only £8.6 million (NZ$16.8 million) of income taxes on £3.1 billion (NZ$6 billion) of sales since 1998, by reporting consistent losses, even as it told investors the UK was a profitable market.

The report prompted a media storm and calls from lawmakers for a probe of Starbucks by the tax authority. Prime Minster David Cameron said last week in response to a question in parliament about big companies paying little or no tax on UK earnings that he was unhappy with the current situation.

Google has come under fire for routing sales to UK clients via an Irish subsidiary, thereby avoiding UK income tax on any profits made. Amazon bills its European customers from a Luxembourg-based subsidiary.

European Union rules allow companies to sell into one EU market from another.

Ireland and Luxembourg have tax regimes that allow companies incur effective tax rates well below the headline UK rate of 24 percent.

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- Reuters

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