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Starbucks, Amazon and Google questioned in parliament over tax

Read Reuters correspondent Tom Bergin's original special report into how Starbucks avoids UK taxes.

Tom Bergin's preview of today's hearing

by Reuters_RossChainey 11/12/2012 3:37:04 PM

The Public Accounts Committee is preparing to quiz Starbucks, Amazon and Google. Here's who's on the committee bit.ly/SWKP7u
— Linda Noakes (@lnoakes) November 12, 2012

by Reuters_RossChainey 11/12/2012 2:29:02 PM
by Reuters_RossChainey 11/12/2012 2:35:09 PM
MPs roast taxman over Starbucks tax bill

Reuters' Tom Bergin filed this report last week on the tax scandal:

MPs tore into the chief of the tax authority for allowing coffee chain Starbucks to pay almost no corporation tax despite selling coffee and snacks worth billions of pounds to British customers.

MPs on the Public Accounts Committee, which is tasked with ensuring value in government financial affairs, said Starbucks's low tax payments had undermined public trust in the whole tax system.

Read on

by Reuters_RossChainey 11/12/2012 3:00:09 PM
The hearing seems to be running a little bit late. Should be getting started in a few minutes.

by Reuters_RossChainey 11/12/2012 3:20:44 PM
The hearing is now under way. The three witnesses are Starbucks Chief Financial Officer Troy Alstead, Matt Brittin, Chief Executive Officer of Google UK and Andrew Cecil, Brussels-based Director of Public Policy for Amazon.

by Reuters_RossChainey 11/12/2012 3:26:15 PM
Margaret Hodge is the committee chair. She starts with Starbucks, asking CFO Troy Alstead whether it is true that the coffee chain has filed losses for most of the time it has been doing business in the UK. Alstead says this is correct.

Why then, Hodge asks, did a Starbucks executive tell investors that the company made a 15% profit in the UK? Alstead says he does not recognise this figure of 15%.

The company made a profit in the UK in 2006, but it was a small one. Are you lying to investors, asks Hodge. No, says Alstead.

by Reuters_RossChainey 11/12/2012 3:45:36 PM
If you made losses in the UK over 15 years, why are you still doing business here, Hodge asks.

Starbucks has to be in the UK to be seen as a global business, says Alstead.

by Reuters_RossChainey 11/12/2012 3:46:36 PM
MP Stewart Jackson takes over the questioning. He says he isn't convinced by the Starbucks business model, and thinks its intellectual property arrangements (Starbucks pays a 6% fee to divisions overseas) are there to help it avoid tax. Alstead says this isn't true.

Jackson asks Alstead if he knows of any other company with a 31% market share that isn't turning a profit. Alstead says he doesn't know about other companies.

by Reuters_RossChainey 11/12/2012 3:51:30 PM
MP Austin Mitchell says his heart bleeds for Starbucks (between you and me I think he's being sarcastic). Either the company is not being run efficiently or there is some fiddling going on, he tells Alstead. Mitchell asks where this 6% goes.

Alstead says it is passed on to the roasting division in Amsterdam. Some of it goes to the US, some of it stays in the Dutch capital.

by Reuters_RossChainey 11/12/2012 3:54:51 PM
Alstead tells Mitchell that the money is not being stashed in a tax haven.

Stephen Barclay, a Conservative MP, takes over. Alstead tells him that Starbucks has a special tax arrangement with the Dutch government.

by Reuters_RossChainey 11/12/2012 3:57:00 PM
Hodge moves on to questioning Andrew Cecil, Brussels-based Director of Public Policy for Amazon.

by Reuters: Mark Kolmar 11/12/2012 4:18:23 PM
Hodge asks if she is buying from a UK company when she buys from "Amazon.co.uk"; Cecil says that Amazon is one company in all of Europe.

by Reuters: Mark Kolmar 11/12/2012 4:21:29 PM
Hodge says that orders are delivered by Royal Mail; Cecil says that there are warehouses in the UK, but the company is based in Luxembourg.

by Reuters: Mark Kolmar 11/12/2012 4:23:24 PM
Cecil says Amazon.co.uk Ltd is a services company that provides services to the Luxembourg-based pan-European operation, such as organising packing and delivery in the UK.

by Reuters: Mark Kolmar 11/12/2012 4:27:15 PM
Asked how much of the Luxembourg company's sales are to the UK, Cecil replies that they have not broken down figures on a country-by-country basis.

by Reuters: Mark Kolmar 11/12/2012 4:28:37 PM
Hodge pushes the notion that the "entire economic activity" of activities relating to UK sales occur in the UK, and that the UK tax paid by Amazon is not representative of that.

by Reuters: Mark Kolmar 11/12/2012 4:41:28 PM
Asked about who owns Amazon EU SARL, Cecil says it is owned by a holding company, also based in Luxembourg. Asked who owns the holding company, he says he does not know. The MPs suggest this is not credible, and that he can send someone to make a phone call to bring back an answer in the next 10-15 minutes.

by Reuters: Mark Kolmar 11/12/2012 4:49:24 PM
Hodge, citing the inability of Cecil to answer a number of questions, says that Cecil is not a "serious person" that has been put up by Amazon to the committee, and that they will call for another representative to attend another hearing.

by Reuters: Mark Kolmar 11/12/2012 4:57:27 PM
Hodge moves on to questioning Matt Brittin, Vice President, Northern and Central Europe for Google.

by Reuters: Mark Kolmar 11/12/2012 5:01:42 PM
Matt Brittin says the bulk of the economic value for Google is created in California, where the software work is done.

by Reuters: Mark Kolmar 11/12/2012 5:12:19 PM
Hodge criticises Brittin for not being familiar with tax matters when the hearing is about tax. Brittin replies that the committee specifically requested it be him that appear.

by Reuters: Mark Kolmar 11/12/2012 5:18:07 PM
Latest news from Tom Bergin, author of the original Starbucks special report:

Amazon receives $252 MLN back tax claim

LONDON, Nov 12 (Reuters) - Internet retailer Amazon said it had received a $252 million demand from the French tax Authorities for back taxes, interest and penalties in relation to "the allocation of income between foreign jurisdictions".

Amazon said it would fight the claim, in court if necessary, and that the claim related to the calendar years 2006 through 2010.

"We disagree with the proposed assessment and intend to vigorously contest it," the company said in its third quarter results filed last month.

An Amazon official referred to the tax demand, which had not been previosuly widely reported, at a UK parliamentary committee hearing.

by Reuters: Mark Kolmar 11/12/2012 5:19:49 PM
Hodge accuses all three appearing of manipulation to avoid corporation tax, despite doing business in the UK.

by Reuters: Mark Kolmar 11/12/2012 5:52:01 PM

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Starbucks, Amazon and Google questioned in parliament over tax

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