Google and Amazon face up to UK MPs over tax payments

Google and Amazon are set to face a grilling from British MPs on Monday afternoon over their tax arrangements.

Google's UK chief executive Matt Brittin and Amazon public policy chief Andrew Cecil will go in front of the Public Accounts Committee, alongside Starbucks's chief financial officer. The subject of the chat will be 'Taxation of Multinational Corporations'.

It emerged in April that Amazon is under investigation by British tax authorities (as well as those in China, Germany, the US, France, Japan and Luxembourg). In the case of the UK, the company managed to pay zero tax in the country on £3.3bn in sales last year, by running everything through a Luxembourg holding.

Google, meanwhile, paid all of £6m tax, or 1.5 percent, on revenues of £395m during 2011. Google achieved this by basing its operations for Europe, the Middle East and Africa in Ireland, which has a corporation tax rate of 12.5 percent, then reducing even its Irish tax liabilities by sending vast amounts of cash to Bermuda via a Dutch holding company.

Google is not the only big US firm to plug into Ireland's attractively low tax rates — Facebook bases all its non-North American operations there, and Apple also used an Irish subsidiary as a tool to help it pay less than two percent tax on its non-US profits in the 2012 financial year.

Microsoft also goes with Ireland for cutting down its tax bill, while eBay prefers the Luxembourg/Switzerland route — a tactic that has allowed it to pay around £1m in UK corporation tax on £800m in sales during the last financial year.