REPRESENTATIVES OF GOOGLE AND STARBUCKS are to give evidence before the Public Accounts Committee as the government probes the US multinationals’ UK tax affairs.
Sitting on Monday, the session on HM Revenue & Customs’ 2011/12 accounts will also discuss the companies’ contributions to the public purse, reports the Financial Times.
Earlier in October, it was reported that Starbucks had filed losses with Companies House since 2009 – meaning it paid no corporation tax – despite having told its shareholders it had a profitable operation in the UK. It is alleged to have paid just £8.6m in corporation tax since it arrived in the UK in 1998.
Google recently attracted criticism as well, reducing its bill by diverting sales through its European headquarters in Ireland. It pays a royalty for the use of its parent company’s search and advertising technologies, which causes earnings to move to Bermuda through the Netherlands, according to a 2010 Bloomberg investigation.
Chairwoman of the committee and Labour MP for Barking Margaret Hodge said the committee hearing was “an opportunity to explain why they don’t pay proper levels of tax in the UK”.
Last week, she queried the prime minister’s decision to criticise comedian Jimmy Carr for his involvement in a tax avoidance scheme which saved him £3.3m against the background of large companies avoiding much greater sums.
“Apple, Google, Facebook, eBay and Starbucks have avoided nearly £900m. Will the prime minister now take this opportunity to condemn their behaviour as morally wrong?” she asked.
Cameron said he was “not happy with the current situation” and told the commons large companies mitigating their liabilities can expect to be investigated by the taxman.
Google said in a statement: “We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over 2,000 people, help hundreds of thousands of businesses to grow online, and invest millions in supporting new tech businesses in east London. We comply with all tax rules in the UK.”
Starbucks, too, denies any wrongdoing. “We seek to be good taxpayers and to pay our fair share of taxes … we don’t write this tax code; we are obligated to comply with it, and we do,” said a spokeswoman.
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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