Google, Amazon, Starbucks are 'immoral' and 'ridiculous' over UK tax
'We don't make any money here' insists milkbar bigwig
MPs didn't shrink from telling senior execs from Amazon, Starbucks and Google that they were "ridiculous", "unbelievable" and "immoral" about their UK taxes.
Under questioning from the Public Accounts Committee, Andrew Cecil, the director of public policy for Amazon, tried to claim that he had no idea what sales were made in Britain alone because European sales were taken as a whole. Cecil also said that the Luxembourg-based headquarters for Amazon EU S.a.r.L. was owned by a holding company but couldn't explain why that was necessary or who then owned that holding company.
The committee said that Amazon.co.uk gave every impression of being a British firm, books that were ordered from the site came through the Royal Mail, from a UK fulfilment warehouse that billed the person, but somehow taxes ended up being paid in Luxembourg, where the rate is less than the UK's.
But Cecil said that some taxes were paid in Britain by Amazon UK Ltd, the company that ran the fulfilment centres in the country, among other jobs. He said that Amazon paid £1.8m in corporation tax on over £200m turnover in 2011. He also said that Amazon EU S.a.r.L. turned over €9.1bn, but somehow only made a profit of €20m.
The MPs said that they weren't against internet shopping, most of them were happy customers of Amazon, but they just couldn't understand how the figures worked out the way did.
"I'm a satisfied customer," Austin Mitchell, Labour MP, said. "I love those emails you send asking me if I want that biography of John Major or Fifty Shades of Grey… [but] your business is here, your customers are here."
Cecil stuck with the same answer to almost every question, protesting "We're a pan-European company!" at least five times.
The MPs in the committee were increasingly exasperated at what they termed "evasive" and "ridiculous" answers.
"You've come with nothing!" Labour MP Margaret Hodge exclaimed after Cecil once again said he didn't have the answer to a question with him. "We will have to order a serious person to appear before us and answer our questions."
Google VP for sales and operations in Northern and Central Europe, Matt Brittin, was refreshingly blunt by comparison, admitting that Google's European operations were set up in Ireland because its corporation tax was just 12.5 per cent versus 20 to 24 per cent in the UK.
He said Ireland also offered a skilled workforce since tech companies like Intel and Microsoft were already in the country but one reason to set up there was the favourable tax rate.
When Hodge asked why Ireland paid money on to the Netherlands, Brittin said that was no longer "necessary" but admitted it was a setup that used to help the company out with tax. He also admitted to having operations in tax haven Bermuda, which he claimed were to hold intellectual property rights outside the US.
Next page: Google was invented in America, you know
Re: Totally agree.
So what do you expect them to do - just ignore it?
Re: what do you expect them to do
Really? That's your advice? Just lower taxes? Taken universally, that just means a race to the bottom Britain can't win. There's always going to be an island nation that'll be happy with a few thousand for a business license and no income tax at all.
Companies who want to do business here need to pay what they owe, and not export their profits overseas. To do otherwise is simple theft, and ought to be prosecuted as such.
I think that you have missed the point.
These companies claim that their profit on billions of pounds of sales turnover is non-existent. If that were true there would be no problem. However, it appears that they use slippery accounting procedures to export the profits that they do make to tax havens. Because they hide their real profit margin, the only way to comment on this or for El Reg to report on it, is to look at the tax paid as a proportion gross revenue.
If you generously assumed that Starbuck's EBIT was 15% of gross revenue, then they would need to be paying more like £90M in tax on revenues of £3.1B.