The 'immoral' tax avoiders: Amazon, Starbucks and Google lashed by MPs over elaborate schemes that deprive Britain of millions

• 'It seems to us that you are exporting your profits to minimise your tax', says committee chairman Margaret Hodge when questioning Starbucks chief
• Amazon and Google also being questioned over decision to base European operations in countries that have lower tax rates such as Luxembourg
• Starbucks paid no corporation tax in the past three years, Amazon paid no corporation tax last year and Google is accused of paying just £6m in tax

The 'immoral' tricks used by corporate giants to avoid UK tax were laid bare yesterday.
Executives from Google, Starbucks and Amazon revealed how they base operations offshore and route profits to tax havens.
They had been summoned by MPs to explain why they contribute little or nothing to the Treasury's coffers. In a three-hour inquisition:

• Google admitted funnelling profits to a company in the tax haven of Bermuda;
• Starbucks said it had a deal with the Dutch government to minimise its tax bill and 'buys' coffee through Switzerland even though the beans never touch Swiss soil;
• Amazon admitted basing its European operations in Luxembourg because of the low tax there;
• The internet giant also claimed not to know its UK turnover.

Troy Alstead, global chief financial officer at Starbucks, was told his defence that the coffee chain continually made a loss in Britain 'just doesn't ring true'

The legal ruses deployed by the three US firms have caused outrage because ordinary taxpayers are left to make up the difference.
Protest group UK Uncut yesterday vowed to take direct action on December 8 to try to shut down some of the nation's 700 Starbucks outlets.
Margaret Hodge, the Labour chairman of the public accounts committee that held yesterday's session, told the executives before her: 'We're not accusing you of being illegal, we're accusing you of being immoral.'
The MPs are probing the tax that HM Revenue and Customs takes from global corporations.
Google, which was accused of avoiding more than £200millon in tax last year by basing its operations in Ireland, admitted structuring its affairs to minimise its liability.
But Matt Brittin, Google's UK chief executive, said the search giant was right to pay the bulk of its taxes in the US because its crucial operations and technology teams were largely based there.

Asked to explain the Bermuda connection, he replied that the island housed the company's intellectual property outside of America.

Andrew Cecil, Director Public Policy at Amazon, also received a grilling by MPs yesterday over basing their EU operation in Luxembourg

Tax matters: Starbucks has not paid UK corporation tax in the past three years, while Amazon paid no UK corporation tax last year despite being Britain's largest online retailer

Google reports the lion's share of its non-US income through Ireland because of the low corporation tax rate there. Even then some money is sent to Bermuda where rates are even lower.
Google paid only £6million to the Treasury last year on UK sales of £2.6billion.
Starbucks was strongly criticised for paying just £8.6million in tax in 14 years of trading in Britain. It paid none in 2011 on revenues of £398million.
Troy Alstead, its chief finance officer, said the UK arm had not yet turned a profit and the parent company was 'not at all pleased about our financial performance'.

THE GREAT BRITISH TAX ROBBERY - By Alex Brummer, City Editor

The ritual humiliation of top brass from Starbucks, Google and Amazon is good theatre. But it would have been more respectful of the Commons had the real bosses, including Howard Schultz (right) of Starbucks, turned up rather than their surrogates.

These corporate giants would not treat a hearing by Congress so lightly. For Starbucks, which has the most direct contact with UK consumers, the stakes are highest. Arguably Google and Amazon are more remote and there are no great British choices. Starbucks has home-roasted Costa coffee to think about.

The whole of Britain’s corporate tax system is under scrutiny. George Osborne and the Treasury have been banking on lower headline rates of corporation tax to make the UK an attractive destination.
That is a worthy objective but that is not going to capture the income of the tax-avoiders whether they are smart private equity owners such as Macquarie at Thames Water, Cadbury under Kraft ownership, or Starbucks.

Britain’s corporate tax code offers too many breaks. Most obvious is the prejudice in favour of debt over equity. Interest payments are tax-deductible and many private equity-owned businesses are largely a tax-free zone.

Osborne wanted to tackle this distortion in opposition. But in office it has been less appealing, possibly because of lobbying by private equity barons, some of whom might well be Tory Party donors.

If corporation tax receipts were more buoyant the Chancellor  would not have to spend his time grubbing around for little fixes such as the granny and pasty taxes.

The trade-off would be a much lower headline rate of company taxes. The best way of bringing Starbucks and the tech giants under the revenue umbrella would be some kind of unitary taxation or imputation tax system.

Tax would be paid on turnover or sales attributed to the UK marketplace, taking account of numbers of people and assets deployed here.  It would end the dubious practice used by both UK and overseas firms of moving brands, patents and business services into tax havens so as to escape the intrusion of HMRC.

If that happened, there might even be room for some personal tax cuts to fuel spending power and growth.

But MPs expressed surprise that a loss-making firm would be able to afford to keep opening stores.

'You're either running the business badly or there is a fiddle going on,' said Labour's Austin Mitchell.

MPs were also angry that Starbucks in the UK pays a 4.7 per cent fee to the coffee giant's Dutch arm for the right to use its branding and coffee recipe.

The fee, which has been as high as 6 per cent, reduces its UK tax bill.
'You go for what you think you can get away with and you charge that,' said Mrs Hodge. 'You just look at the going rate in a jurisdiction and you charge that.'

Matt Brittin, Chief Executive Officer of Google UK, who also faced questioning yesterday

STARBUCKS: THE COFFEE RETAILER THAT FOUND THE PERFECT BLEND

There are over 17,009 Starbucks coffee shops across the world.
The company began in 1971 and started as a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle's Pike Place Market.
Now the company has millions of customers through its doors every day in more than 50 countries.
Starbucks has more than 30 blends and single-origin premium arabica coffees.
Starbucks went public in 1992, at a price of  $17 per share and closed trading that first day at $21.50 per share.

GOOGLE: THE MIND-BOGGLING GROWTH OF AN INTERNET GIANT

Google was founded in California in 1998 by Stanford University PhD students and friends Larry Page and Sergey Brin.
It now employs more than 53,000 people around the globe.
Google receives more than seven billion daily page views. In 2011 it made $11.6bn profit and generated almost $38bn revenue.
The company, whose unofficial slogan is 'Don't be evil', is now valued at $217.87bn.
Its shares were up today on the New York stock exchange, hovering around the $666 mark - despite the negative publicity the company was getting in the UK over its tax.

Mr Alstead said his firm had a deal with the Dutch government that gives Starbucks a special tax rate in Amsterdam.
The terms of the bargain, he said, were 'iron bound in confidentiality', and he couldn't reveal them in the open hearing. Mrs Hodge countered that it was a 'sweetheart deal'.

Mr Alstead also revealed that the coffee, which is bought through Switzerland, never goes to the country despite having a 20 per cent mark-up slapped on it when being sold to other countries, such as the UK.

Amazon said it used Luxembourg as a base for its European operations because of the favourable tax rate there.

Committee chairman Margaret Hodge, pictured, said to the Starbucks boss: 'It seems to us that you are exporting your profits to minimise your tax'

Andrew Cecil, the online retailer's public policy director, said the Luxembourg business's turnover in 2011 was £7.3billion yet it paid taxes of just £6.4million.

AMAZON: THE BIGGEST BEAST IN THE ONLINE RETAIL JUNGLE

Amazon employs nearly 70,000 people world-wide.

Last year, it turned over more than $48bn revenue.

The company was founded in 1994. But since then has grown into the biggest online retailed in the world.

It is estimated to be worth $102.51bn

Some 65million customers log on to its U.S. website each month.

It paid no UK tax in 2010 on revenues of £3.3billion.
MPs were furious that he refused to reveal how much the company made from its British arm.

'It's quite insulting to our intelligence that you claim you don't know what sales you make in the UK,' said Liberal Democrat MP Ian Swales, a member of the influential Commons committee.

Mr Cecil claimed that Luxembourg, which employs around 500 people, was the real 'engine' of the business, rather than the UK, where it employs 15,000.

Its profits are booked in Luxembourg, with the UK figuring only as a 'service arm'. MPs said his answers were 'evasive' and 'annoying' and Margaret Hodge said the committee would call 'a serious person' for further questioning.

She said Mr Cecil's ignorance was 'outrageous' and that he had 'been put up' to it by the company.