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Starbucks, Google and Amazon executives questioned over tax dodging

Industry Sector

Retail

Published

13 November 2012

Author

Matt Bodimeade

Type of News

Financials

Yesterday saw executives from Starbucks, Google and Amazon receive a grilling from UK lawmakers, who are accusing the companies of not paying enough tax in Britain.

The head of Google UK and top managers from Starbucks and Amazon were invited to appear infront of Britain's Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.

Starbucks admitted the Dutch government had granted a special tax deal on its European headquarters, which receives royalty payments from its UK business.

Starbucks has paid no corporation, or income, tax in Britain in the past three years and had paid only 8.6 million pounds since 1998. Reporting a taxable profit only once in its 15 years of operating in the UK.

Over this period it sold 3.1 billion pounds worth of coffee, prompting criticism from politicians and media commentators.

Amazon and Google also confirmed they used favourable European tax jurisdictions for their UK businesses.Starbucks, Google and Amazon

Amazon admitted receiving a $252 million back tax claim from the French tax authority in September, related to its practice of channeling European sales through Luxembourg. The company said it was fighting the claim, referred to by an Amazon official at the hearing.

Members of the committee repeatedly criticized Andrew Cecil, Brussels-based Director of Public Policy for internet retailer Amazon, for failing to answer questions about the group's operations.

Cecil declined several times to tell the committee the level of Amazon's sales in the UK. "We have not disclosed those figures ever publicly," he said.

However, Amazon's annual reports do disclose this figure. The most recent regulatory filing gave UK revenues as 11-15 percent of total sales in 2011, an amount equal to $5.3 to $7.2 billion.

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

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%, its main UK unit reported a loss in 2011 and 2010. It had a tax charge of just 3.4 million pounds in 2011.

For more information on the UK retail market, see the latest research: UK Retail Reports

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Visitor Comments

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Tess Johnson

746 Days ago

Just seen today's headline: "Starbucks agrees to pay more corporation tax" That's good of them. Hadn't realised it was optional to pay tax!?!? Seems to me they have just had a look at what Costa have been paying and decided to add on a little more. Joke!

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