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Monday, December 3, 2012
Starbucks, Google and Amazon were accused of "immorally" minimising their UK tax bills in a damning report by a spending watchdog today.
The Public Accounts Committee criticised the companies for the "unconvincing and, in some cases, evasive" evidence they gave on why their corporation tax payments are so low.
Starbucks bowed to pressure over its accounting methods on the eve of the report's publication saying it would review its "tax approach" in the UK.
The coffee giant told MPs it had made a loss for 14 of the 15 years it has operated in the UK, achieving just a small profit in 2006.
In its report the committee said it found that claim "difficult to believe" and said it was "inconsistent" with claims the company was making about its success to shareholders.
Yesterday the chain, which has more than 700 outlets in the UK, said it was "committed to the UK for the long term" and added: "We are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury."
The company, which was hit by a customer boycott in protest over its low tax payments, said it would release further details of its UK tax plans this week.
MPs warned there are many multinationals exploiting tax laws to move offshore profits that are clearly generated in the UK and called on the government to "get a grip".
It accused HM Revenue and Customs of looking "way too lenient" over the way it deals with big name firms who are "getting away with" paying little or no corporation tax.
Margaret Hodge, who chairs the Public Accounts Committee, said: "Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here.
"This is outrageous and an insult to British businesses and individuals who pay their fair share.
"Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever.
"There is little credible information about what is going on. The evidence we took from large corporations was unconvincing and, in some cases, evasive. HMRC also lacked clarity when trying to explain its approach to enforcing the corporation tax regime.
"The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK."
MPs rounded on Amazon's representative saying they were left frustrated because he was "evasive and unprepared to answer legitimate questions".
While the company had a UK operation involving 15,000 staff it pays little corporation tax in the UK.
It said the company's UK website reported a turnover of £207 million for 2011 but its tax expense was just £1.8 million.
The report said Google accepted profits should be taxed in the countries where they are generated but "undermined its own argument" because it remits its non-USA profits, including from the UK, to Bermuda, which has an advantageous tax regime.
Google is facing a review of its tax affairs by revenue and customs officials that could land it with a big bill.
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