MPs grill companies over 'immoral' tax avoidance

Starbucks has paid no tax in the last three years, but insists it is within the law
Starbucks has paid no tax in the last three years, but insists it is within the law Photo: Reuters

Three of the world's biggest companies defended themselves against claims their tax management schemes amount to tax avoidance.

Starbucks, Amazon and Google were accused of "immoral" tax avoidance in a fiery three-hour showdown with a Commons spending watchdog. Business Editor Laura Kuenssberg reports.

All three executives denied repeated allegations that they were engaged in aggressive tax avoidance.

  • Starbucks have paid no income or corporation tax income or corporation tax here in the UK in the last three years
  • Google paid taxes of £3.5 million on UK sales of £2.5 billion
  • Amazon paid less than a million pounds on UK sales of £4.5 billion

Starbucks insisted it was "an extremely high taxpayer" globally and acted "to an ethical" as well as legal standard, despite declaring losses on its UK operation. Its global chief financial officer Troy Alstead did admit the company had struck an "attractive" deal with Dutch authorities over tax. He said:

Respectfully, I can assure you there is no tax avoidance here. We have a global tax rate of 33% around the world. Our tax rate outside the US is 21%. That is higher than most multinationals' global rate. We are an extremely high tax payer. We do not manipulate anything, anywhere.

Matt Brittin, CEO of Google UK, insisted it would be "very hard" for it to pay more tax in the UK under present rules. He was commended by MPs for admitting Google chose Ireland and Bermuda as its main bases because taxation rates were favourable. He said:

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

Amazon's public policy director Andrew Cecil endured the most serious verbal mauling, and was accused of not being a "serious person" after he failed to provide MPs with answers to basic questions, such as who owned the Luxembourg-based company.

Chair of the committee Margaret Hodge said:

The idea that you come here and simply don't answer the question and pretend ignorance - it's just not on, it's awful. Your entire activity is here yet you pay no tax here and that really riles us, it riles us.

All three companies stressed a number of times during the hearing that their affairs were entirely legal under British tax law, a point that MPs conceded. Mrs Hodge said:

We are not accusing you of being illegal, we are accusing you of being immoral.