Google and Amazon face up to UK MPs over tax payments

Google and Amazon face up to UK MPs over tax payments

Summary: The companies, which are just two of the many US companies that avoid paying full UK corporation tax through intricate international arrangements, will be questioned by the Public Accounts Committee on Monday.

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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'.

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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.

Topics: United Kingdom, Amazon, Google, Government UK

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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7 comments
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  • Shame on Google: corporate tax-dodger

    "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"

    This money should be funding public services like hospitals and schools, but Google would rather give it to wealthy executives and shareholders and has used every trick in the book to achieve that greedy goal.

    Thus, ordinary working people like you and me end up paying higher taxes to make up the shortfall.
    Tim Acheson
    • You point @ Google

      Yet all the big companies are doing exactly the same. You think M/Soft is any different - yeah right. Companies do it, MP's do it, BBC journalists do it - in fact, it's only the suckers like you and me on 'normal' wages that don't seemingly do it as a rule.

      And by the way it's not tax dodging, it's legal tax avoidance and unfortunately is only morally wrong, not legally, until they plug the holes. However these are big holes and would need significant tax restructuring across the globe, not just the UK.
      Little Old Man
    • The primary responsibility of corporate directors

      is to create wealth for the shareholders. That means minimizing tax payments legally. If what they do is legal, you cannot blame them. They are simply doing their jobs.

      Maybe the US government could push for better and more comprehensive international tax treaties to eliminate some of these corporate tax loopholes, instead of the intellectual property deals they are pursuing on behalf of the MPAA/RIAA.

      Corporations are owned by individuals. If you cannot tax the corporations, tax the owners, like Romney, who pays very little tax on his income from corporate holdings. This may of course also affect your 401k.
      D.T.Long
      • Exactly, can't really blame the companies

        Purest definition of business excludes morality within business decisions unless directly affecting turnover/profit. Anyone who expects these massive companies to pay more tax than absolutely necessary is naive, to say the least.

        Any individual on here ever reduced the value of a product, imported from overseas, because if they have, they're as morally bankrupt as google et al.
        Little Old Man
      • That is the expectation...

        ...but the cost of bottom-line management is that politicians and bureaucrats need to try harder to enforce the law than they would otherwise, making sure that fines and jail time, and in the case of foreign corporations, exclusion, are part of the profit and loss calculations.

        There ain't no such thing as a free lunch.
        John L. Ries
        • Forgot to mention some additional costs

          1. A pure focus on profit and loss contributes to an anti-business political climate as voters correctly assume that business owners and corporate executives are acting in ways that are contrary to the public interest.

          2. It undermines the trust that is necessary for any economic system to function properly.

          The Pickens Doctrine is the worst thing to happen to business in the U.S. and other western countries in my lifetime. It needs to be abandoned in favor of a more balanced approach.
          John L. Ries
  • The difference is between tax evasion (illegal) and avoidance (not)

    These compnaies are very close to evasion and it is only a matter of interpretation of the law that has left them not paying the reasonable taxes.

    Its like Nevada declaring that companies pay only 1% tax on profits. So Starb. then uses transfer costs to make California stores run at a loss and make the two in Nevada run at a big profit. Nevada buys all beans for Starb and sells them at 10 times cost to California.

    If you want to read an amusing real time comentary
    https://twitter.com/RichardJMurphy


    Note how these corportations are hiding cash from the US Tax Auth by piling it up in Bermuda and other places.
    sonnet37