Amazon, Google, Starbucks grilled on why they pay such piddling tax in UK

British lawmakers have been putting giant US companies - Starbucks, Google and Amazon - through the hoops as to why they pay so little tax on massive earning in Britain.

Starbucks: 15 yeasr of losses? Really?

Starbucks global CFO Troy Alstead attracted derision as he claimed that the coffee giant's losses for all but one of the 15 years it has operated in the U.K. were down to poor performance -- not an attempt minimise 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.

Hodge told witness Andrew Cecil, public policy director at Amazon, that many people in Britain were angry over the low tax rates they pay.

"Your entire activity is here yet you pay no tax here and that really riles us," she said. Cecil declined several times to tell the committee the level of Amazon's sales in the U.K. "We have not disclosed those figures ever publicly," he said.

However, Amazon's annual reports DO disclose this figure: U.K. revenues were 11-15 percent of total sales in 2011, around £4 to £6 billion.But Amazon's main U.K. unit paid less than £1 million in income UK tax last year.

"It's just not acceptable ... It's outrageous," said Hodge as Cecil couldn't answer questions about Amazon's UK sales and corporate structure. Amazon avoids U.K. taxes by reporting European sales through a Luxembourg-based unit. This allows it to pay a tax rate of 11 percent on foreign profits.

As for Google, Matt Brittin, Vice President for Sales and Operations in Northern and Central Europe, said the company did cut its tax bill by channelling profits from European sales through Bermuda - but this was perfectly legal.

Google had £2.6 billion of sales in the U.K. last year, but its main U.K. unit reported a loss in 2011 and 2010. Overall its profits were 33%. Its UK tax bill in 2011: a minute £3.4 million pounds .

Google books European sales via an Irish unit, which allowed it to pay taxes at 3.2 percent on non-U.S. profits last year.

Angry MPS accused all three companies of siphoning profits away from Britain by using a complex web of accounting strategies that were cynical and “unjust”.

“We are not accusing you of being illegal,” said Mrs Hodge, “we are accusing you of being immoral.”

Search The Drum Jobs

Explore the best jobs in Marketing and Media industries
View all open jobs