Starbucks, Google and Amazon Quizzed over Tax Avoidance

13 - 11 - 2012

Top executives from Starbucks, Google and Amazon faced questions about the tax affairs of the three US multinationals when they appeared before Britain’s Public Accounts Committee (PAC) yesterday.

The PAC, which is responsible for monitoring government financial affairs, accused the companies of diverting profits away from Britain by using a variety of “unjust” accounting tactics.

Global coffee-chain Starbucks, which reported a taxable profit only once in its 15 years of operating in the UK, admitted that Dutch tax authorities had granted a special deal on its European headquarters in Amsterdam, which receives royalties from its UK businesses.
Meanwhile, Google’s northern Europe vice-president, Matt Brittin, openly admitted that the choice to sell advertising space in the Republic of Ireland was made because of its favourable 12.5% corporation tax rate. It recently emerged that Google had paid just £6m in UK corporation tax on revenues of £395m in 2011.
Online retailer Amazon was accused of channelling its European sales through its Luxembourg headquarters in order to keep tax rates on its foreign profits at 11%. Amazon generated sales of more than £3.3bn in the UK last year but paid no corporation tax on its profits, according to a report by the Guardian. Amazon’s director of public policy, Andrew Cecil, maintained that the company had never publicly disclosed the country-by-country breakdown of its European sales. However, he did admit that Amazon has received a $252million demand for back taxes from French tax authorities.
The executives of all three companies maintained that there are valid reasons for the tax arrangements and that they are operating within the law.
Chairman of the PAC, Margaret Hodge MP, told the executives: ‘We’re not accusing you of being illegal, we are accusing you of being immoral.’






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Foremans LLP