Read

Search form

U.K. Lawmakers to Question Execs in Tax Dodging Probe

U.K. Lawmakers to Question Execs in Tax Dodging Probe
Wed, 11/14/2012
This article originally appeared on Reuters

LONDON (Reuters) - U.K. lawmakers will quiz executives of Starbucks, Google and Amazon about how they have managed to pay only small amounts of tax in Britain while racking up billions of dollars worth of sales here.

The Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, has invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.

"It is hard for the ordinary person to believe it's fair," said Margaret Hodge, a member of parliament for the opposition Labour party and chairman of PAC.

"It makes people incredibly angry in the current fiscal climate," she added, in reference to the austerity measures which large budget deficits have forced on the U.K., and other countries.

Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes.

A Reuters report last month showed that Starbucks had paid no corporation, or income, tax in the UK in the past three years.

The world's biggest coffee chain paid only 8.6 million pounds ($13.74 million) in total U.K. tax over 13 years during which it recorded sales of 3.1 billion pounds.

Campaign group UK Uncut, which is opposed to government austerity measures and which has organized protests against British telecom operator Vodafone and pharmacist Boots over their tax practices, said in a statement on Monday that they planned to target Starbucks.

In response, Starbucks said it followed the tax rules in every country where it operates and sought to pay its fair share of taxes. "We are committed to being transparent on this issue and look forward to appearing before this committee," a spokeswoman said.

Starbucks Chief Financial Officer Tory Alstead will give evidence to the committee, as will Matt Brittin, Chief Executive Officer of Google U.K., and Andrew Cecil, Brussels-based Director of Public Policy for Amazon, a PAC spokesman said.

Google's filings show it had $4 billion of sales in the UK last year, but despite having a group-wide profit margin of 33 percent, its main U.K. unit had a tax charge of just 3.4 million pounds in 2011.

The company avoids U.K. tax by channeling non-U.S. sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-U.S. profits. Amazon's main UK unit paid less than 1 million pounds in income tax last year. The company had U.K. sales worth $5.3 to 7.2 billion, filings show.

Amazon avoids U.K. taxes by reporting European sales through a Luxembourg-based unit. This structure allowed it to pay a tax rate of 11 percent on foreign profits last year - less than half the average corporate income tax rate in its major markets.

Google declined to comment. Amazon did not respond to requests for comment.

Hodge and former financial services minister Paul Myners told the Sunday Telegraph newspaper that the government should consider a new revenue-based tax to ensure profits from U.K. sales didn't go offshore.

Add new comment

Sign Up

Article Tabs

Alex Salmond, Scottish National Party, Scottish Independence referendum, indyref, Brexit, Better Together

In light of the Brexit chaos, the broken promises and democratic deficit, it would be easy to think independence is certain – and judging by the movement's energy in Scotland, 2018 could be the year.

carbon emissions, Pakistan coal plants, Pakistan coal generation, Pakistan energy policy

On its projected track, Pakistan will generate a total capacity of over 23,000 megawatts of electricity from coal in the next few years to overcome its steep energy requirements.

student loans, student debt, college debt, Student Loan Asset Backed Securities, subprime mortgage securities, collateralized debt, Federal Family Education Loan Program, Student Income Loans, Student Income Loans

A crucial difference between the subprime debt bubble and the student debt bubble is that the properties that comprised subprime mortgage securities served as collateral to the mortgage debt.

DiEM25, austerity policies, Brexit, Lexit, Democracy in Europe Movement, Grexit

Former Greek finance minister Yanis Varoufakis responds to his critics and lays out DiEM25’s plan for resisting within the European Union.

Five Star Movement, Beppe Grillo, anti-corruption movement, populist politics, Euro-skeptic party, Italian political corruption, Silvio Berlusconi, Virginia Raggi, Chiara Appendino

The transparency and political openness that helped the 5 Star Movement rise to power must now bring the party's current and future proposals to the forefront if it hopes to achieve any lasting change.

occupy, activism, creative activism, alt-right, white supremacy, neo-nazi, bigotry, racism, sexism, white nationalism, white genocide, Milo Yiannopoulos, Richard Bertrand Spencer, Gabriella Coleman, hacktivism, Anonymous, hacker, whistleblower, digital ac

We're introducing a new segment for all those times you think to yourself, "Wow, that's fucked up." First topic: white supremacists.

Posted 6 days 11 hours ago
carbon emissions, Pakistan coal plants, Pakistan coal generation, Pakistan energy policy

On its projected track, Pakistan will generate a total capacity of over 23,000 megawatts of electricity from coal in the next few years to overcome its steep energy requirements.

Posted 4 days 11 hours ago
Five Star Movement, Beppe Grillo, anti-corruption movement, populist politics, Euro-skeptic party, Italian political corruption, Silvio Berlusconi, Virginia Raggi, Chiara Appendino

The transparency and political openness that helped the 5 Star Movement rise to power must now bring the party's current and future proposals to the forefront if it hopes to achieve any lasting change.

Posted 5 days 10 hours ago
student loans, student debt, college debt, Student Loan Asset Backed Securities, subprime mortgage securities, collateralized debt, Federal Family Education Loan Program, Student Income Loans, Student Income Loans

A crucial difference between the subprime debt bubble and the student debt bubble is that the properties that comprised subprime mortgage securities served as collateral to the mortgage debt.

Posted 4 days 11 hours ago
Alex Salmond, Scottish National Party, Scottish Independence referendum, indyref, Brexit, Better Together

In light of the Brexit chaos, the broken promises and democratic deficit, it would be easy to think independence is certain – and judging by the movement's energy in Scotland, 2018 could be the year.

Posted 1 day 1 hour ago
DiEM25, austerity policies, Brexit, Lexit, Democracy in Europe Movement, Grexit

Former Greek finance minister Yanis Varoufakis responds to his critics and lays out DiEM25’s plan for resisting within the European Union.

Occupy Wall Street, rising inequality, park occupations, financialization, debt, David Graeber, Occupy legacy, social protests, economic justice, Jeremy Corbyn

Five years after Occupy, organizer and anthropologist David Graeber speaks to ROAR about the power of finance, the history of inequality and the legacy of the movement.

tax increment financing, TIF agreements, Michael Phelps, Sagamore Development Corporation, Port Covington plan, Baltimore gentrification, Baltimore development

In Baltimore, activists are urging city officials to move beyond "tax increment financing" that privileges billionaires at public expense.

student loans, student debt, college debt, Student Loan Asset Backed Securities, subprime mortgage securities, collateralized debt, Federal Family Education Loan Program, Student Income Loans, Student Income Loans

A crucial difference between the subprime debt bubble and the student debt bubble is that the properties that comprised subprime mortgage securities served as collateral to the mortgage debt.

wealth inequality, wealth gap, racial wealth gap, Great Recession, Economic Policy Institute, discrimination

As wages for American workers have stagnated for more than a generation, the income gap between black and white workers has widened, and discrimination is the main reason for the persisting disparity.