A public accounts select committee of the UK parliament, made up of a group of senior members of Parliament, is set to vigorously question the tax practices of Google, Amazon, and Starbucks next Monday.
The companies are in hot water over decisions to base their European businesses outside the UK in order to take advantage of lower tax base rates and avoid paying full UK corporation taxes. They will have to explain and defend their European structures, particularly decisions to register base offices in countries such as Ireland and Luxembourg and their use of "transfer pricing"—where they charge their own subsidiary companies for services.
The corporations have been charged with diverting hundreds of millions of pounds to what The Guardian describes as "secretive tax havens" through manipulative accounting practices. Margaret Hodge, the committee chair, has taken each company to account, calling Google’s operating location choice of Ireland “immoral” and labeling Amazon "deliberately evasive" in displaying "outrageous" ignorance after it failed to say how much of its profit is generated in Britain.
In the past three years Starbucks has paid no corporation tax in the UK. Amazon has paid £1.8m, despite bringing a total revenue of £200m in the UK in 2011. Starbucks global chief financial officer Troy Alstead insists the company remains “an extremely high tax payer globally” but, as UK profits have been far from substantial, claims, “respectfully, I can assure you there is no tax avoidance here.” Similarly, Matt Brittin, the head of Google’s northern European operation, defends the company’s practices. “Like any company you play by the rules [and] manage costs efficiently to offer fair value to share holders.”
Hodge has been unimpressed with the companies’ responses. "Most of these companies proclaim a strong corporate responsibility ethos, yet the most basic responsibility they have is to pay their fair share into the common purse," she argued, according to Raw Story. "The fact that they create jobs is an absurd argument. We have to ensure that where companies are making money in the UK, they pay their fair share, and there is a duty on HMRC to do all it can to ensure those rules are strictly and fairly adhered to."
Google's Brittin told the committee that "we comply with the law in the U.K." and "it would be very hard for us to pay more tax here based on the way we are required to structure by the system." ABC News reports that Hodge responded by saying that the committee was "not accusing you of being illegal, we are accusing you of being immoral."