UK lawmakers slam Starbucks, Amazon and Google on tax

Customers leave a Starbucks coffee kiosk in the financial district of the City of London Nov 12, 2012. [Photo/Agencies]

LONDON - UK lawmakers criticised executives of Starbucks, Google and Amazon on Monday for not paying more tax in Britain, and Amazon said it had received a $252 million demand for back taxes from France.

Britain's Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.

Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes.

Amazon received a $252 million back tax claim from the French tax authority in September, related to its practice of channelling European sales through Luxembourg. The company said it was fighting the claim, referred to by an Amazon official at the hearing.

Members of Parliament (MPs) on the committee quizzed Starbucks Chief Financial Officer Troy Alstead about how the group's UK unit managed to report 13 years of losses.

"You're either running the business badly, or there's some fiddle going on," Austin Mitchell MP said.

A Reuters report last month showed that Starbucks had paid no corporation, or income, tax in Britain in the past three years and had paid only 8.6 million pounds since 1998.

Over this period it sold 3.1 billion pounds worth of coffee, prompting criticism from politicians and media commentators.

Alstead denied Starbucks was shifting profits out of Britain and blamed high rents for contributing to the company's troubled record in the UK.

He said the UK business only made a profit in Britain once, in 2006, despite his having told analysts on a conference call in 2009 that the UK unit was profitable and his predecessor listing the British operation in 2008, when asked about the foreign markets with the best margins.

Alstead also told the committee the company had an agreement with the Dutch authorities that allowed it pay a "very low tax rate" on its operation there.

Starbucks UK has an agreement to remit 6 percent of its turnover to the Dutch unit - its regional headquarters - in respect to the use of the Starbucks brand.

Alstead also told the committee that Starbucks's Swiss coffee trading unit charged group companies a 20 percent mark-up on coffee beans.

A company spokeswoman said the Lausanne-based unit bought 428 million pounds of coffee beans for an average $2.38 per pound in 2011, suggesting a total coffee bill of over $1 billion and income of more than $200 million for the Swiss unit, which employs 30 people.

Switzerland charges effective tax rates as low as 5 percent for trading in commodities such as coffee, tax lawyers say.

The spokeswoman said the Swiss unit used some of its income to fund f armer support centres and cooperatives i n coffee-growing countries to ensure co ffee is s ourced ethically , although she would not say how much was spent on this.

Alstead denied the world's largest coffee chain channelled profits through tax havens and said it followed the law in every country where it operated.

Starbucks Chief Financial Officer Troy Alstead addresses the Public Accounts Committee (PAC), in London Nov 12, 2012. [Photo/Agencies]