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Google, Amazon, Starbucks are 'immoral' and 'ridiculous' over UK tax

'We don't make any money here' insists milkbar bigwig

Internet Security Threat Report 2014

Google was invented in America, you know

Brittin's big schtick was to insist that Google was a US company, that Californian innovation came up with the computer science behind the firm's products and so ultimately the profits should go back to the US.

"I wish Google had been invented in Cambridge, I really do," he said.

But the MPs pointed out that the money that ended up in Bermuda wasn't getting back to the US.

"What advantage are your shareholders getting from that money?" Hodge asked.

Brittin also insisted that Google paid all the tax in the UK that it legally owed. Its filings show £2.5bn of UK sales in 2011 but tax of just £3.4m.

"We're not accusing you of being illegal, we're accusing you of being immoral," Hodge retorted.

Starbucks, which has paid £8.6m of tax over 13 years when it had sales of £3.1bn, also faced a grilling from the MPs. Troy Alstead, the firm's chief financial officer, said the company had never made a profit in the UK, a claim the committee was not happy with.

"I'll have to run out right now to Victoria Street and buy a double caramel macchiato, you're doing so badly," Mitchell said sarcastically. "You're either running the business very badly or there's some fiddle on."

The committee wanted to know where the UK money was going if not into profit. Alstead said that the shops paid a royalty rate of six per cent to Starbucks in the Netherlands where the firm has its European HQ and a roastery.

The MPs accused him of manufacturing that rate to move British profits out of the country, a charge Alstead denied, saying that many stores around the world paid the same rate.

When he was asked how much tax the coffee chain was paying in the Netherlands, he refused to say, claiming Dutch authorities wanted that to stay confidential. The committee said that the deal must be a "sweetheart" one if Starbucks and the Dutch tax authorities didn't want to reveal it.

Alstead also talked about buying expensive coffee beans in Swiss trading markets that were then sold on to its shops in the UK. He admitted a 20 per cent markup was put on the already pricey beans. The effective tax rate on the trading companies in Switzerland can be as little as five per cent.

Aside from the tiny amount of tax it has managed to pay in the UK, Starbucks is in the soup for telling analysts in a conference call in 2009 that the UK business was profitable and the firm saying in 2008 that Britain was one of the foreign markets with the best profit margins. It then reported British losses for both years.

All three companies have been asked to give more information to the committee than they were wiling to give publicly. Another executive from Amazon could be called before the MPs in the next two weeks. ®

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