Google, Amazon and Starbucks face questions on tax (Update)

Nov 12, 2012 by David Stringer

(AP)—British lawmakers on Monday accused major multinational companies of aggressive tax avoidance, amid calls by the U.K. government for a global crackdown on firms that seek to evade taxes.

In sometimes bitter exchanges at a three-hour parliamentary committee hearing, legislators questioned Starbucks, Google and Amazon about the amount they pay to the U.K. 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 U.K. 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 U.K. 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 European Union 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.

Cecil's claims that he did not know certain information about Amazon or could not make it public infuriated lawmakers.

"The idea that you come here and simply don't answer the question and pretend ignorance— it's just not on, it's awful," Hodge said, calling Cecil a "not serious person."

Matt Brittin, chief executive of Google UK, told the committee that his company picked Ireland and Bermuda as main bases because tax rates were favorable. Brittin denied one lawmaker's accusation that the Internet search giant was breaching its own code of "Don't be evil."

"We comply with the law in the U.K.," he said. "It would be very hard for us to pay more tax here based on the way we are required to structure by the system."

Hodge fired back, saying lawmakers were "not accusing you of being illegal, we are accusing you of being immoral."

Explore further: Weibo IPO below expectations, raises $285.6 mn

5 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

French authorities probe Google's tax bill

Mar 20, 2012

French authorities are probing Google for potential tax avoidance, a source close to the matter said Tuesday, with the US Internet giant facing a possible bill of over 100 million euros ($132 million).

Google chairman hopes for France tax deal soon

Nov 05, 2012

Google chairman Eric Schmidt said Monday he hopes his firm will reach a settlement "by the end of the year" with authorities in France in a billion-dollar dispute over taxes.

Google loses appeal against French tax searches

Nov 02, 2012

A Paris appeals court has rejected a request by Internet search giant Google to invalidate the search and seizure of documents by French tax authorities, according to a copy of the decision obtained by AFP ...

Starbucks teams with Square for mobile payments

Aug 08, 2012

Starbucks is pouring $25 million into electronic payments start-up Square in a partnership that expands mobile payment options at the coffee chain, the companies announced Wednesday.

Recommended for you

Weibo IPO below expectations, raises $285.6 mn

5 hours ago

Sina Weibo sold fewer shares than expected in its US IPO which was priced below expectations ahead of a Thursday listing that takes place after tech selloffs on Wall Street.

'Chief Yahoo' David Filo returns to board

6 hours ago

Yahoo announced the nomination of three new board members, including company co-founder David Filo, who earned the nickname and formal job title of "Chief Yahoo."

Fired Yahoo exec gets $58M for 15 months of work

6 hours ago

Yahoo's recently fired chief operating officer, Henrique de Castro, left the Internet company with a severance package of $58 million even though he lasted just 15 months on the job.

IBM posts lower 1Q earnings amid hardware slump (Update)

16 hours ago

IBM's first-quarter earnings fell and revenue came in below Wall Street's expectations amid an ongoing decline in its hardware business, one that was exacerbated by weaker demand in China and emerging markets.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

holoman
not rated yet Nov 12, 2012
Its not only Britain.

OMB says only 1 in 4 big USA corps making billions pay any taxes.

More news stories

Net neutrality balancing act

Researchers in Italy, writing in the International Journal of Technology, Policy and Management have demonstrated that net neutrality benefits content creator and consumers without compromising provider innovation nor pr ...

Cosmologists weigh cosmic filaments and voids

(Phys.org) —Cosmologists have established that much of the stuff of the universe is made of dark matter, a mysterious, invisible substance that can't be directly detected but which exerts a gravitational ...

Bionic ankle 'emulates nature'

These days, Hugh Herr, an associate professor of media arts and sciences at MIT, gets about 100 emails daily from people across the world interested in his bionic limbs.