MPs accuse Starbucks boss of 'fiddling money out of this country' as he defends company's corporation tax bill of just £1.6m in 14 years

// World | MPs accuse Starbucks boss of 'fiddling money out of this country' as he defends company's corporation tax bill of just £1.6m in 14 years
Email to a friend Plain text Print version // Font size: Decrease font Enlarge font
  • '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

By Larisa Brown

PUBLISHED: 11:57 EST, 12 November 2012 | UPDATED: 12:15 EST, 12 November 2012

MPs have accused Starbucks of 'manipulating' its tax affairs in order to avoid corporation tax in the UK.

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

Committee chairman Margaret Hodge said: 'It seems to us that you are exporting your profits to minimise your tax.' 

Mr Alstead strenuously denied the claims, insisting: 'We are never aggressive in avoiding tax by any means' and the company's decision to base European operations in countries that have a lower tax rates was 'nothing to do with tax avoidance'.

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

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

Starbucks has reportedly paid no corporation tax in the UK during the past three years, despite senior US management trumpeting the company's profitable operations in Britain.

Mr Alstead denied lying to shareholders over the chain's accounts when he appeared before the MPs who are investigating the taxation paid by multinational companies.

The US chain has filed losses with Companies House for most of the years it has been operating in the UK.

Ms Hodge, who chairs the committee of public accounts, questioned how that could happen when statements the committee had seen said in 2007 the division had an operating profit rate of 15 per cent.

Mr Alstead denied knowledge of the statements and insisted the first profit Starbucks made was £6 million in 2006.

The taxable profits of its UK business are calculated net of the royalty paid to its Netherlands regional headquarters.

Mr Alstead said that these royalties were subject to a combined tax rate in the Netherlands and the US of approximately 16%. The UK's main corporation tax rate is 24%.

Starbucks' royalty rate used to be 6% of sales, but was recently reduced to 4.7% after being challenged by the UK tax authorities.

Mr Alstead admitted the Dutch government had granted a special tax deal on its European headquarters, which receives royalty payments from its UK business.

He said the Netherlands offered a 'favourable tax rate', which 'is an attractive reason to be there'.

Ms Hodge questioned why the company even continued to do business in the UK, if it was making such perennial losses.

She asked why the company had filed millions in losses then promoted the head of the UK business, Cliff Burrows, to take over the US operation.

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

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

She said it did not 'ring true' that the man in charge of an operation that was running such an unsuccessful division would be promoted.

Mrs Hodge told the coffee chain boss: 'You have run the business for 15 years and are losing money and you are carrying on investing here. It just doesn't ring true.

'You are losing money. You have tried for 15 years and failed and you have promoted the guy who failed.

'It doesn't ring true Mr Alstead, that's what frustrates taxpayers in the UK.'

She added: 'Are you lying to your shareholders?'

Mr Alstead replied: 'Absolutely not.'

'We are not at all pleased about our financial performance here. It is fundamentally true everything we are saying and everything we have said historically.'

Another MP claimed: 'It looks to me like you are manipulating your tax affairs'.

The public accounts committee is also questioning Matt Brittin, chief executive officer of Google UK and Andrew Cecil, public policy director at Amazon, in the wake of a wave of revelations about the tax affairs of international companies.

The committee is taking evidence on the issue of taxing multinational companies in light of reports that many large firms are paying very little through accounting chicanery, or by funneling profits through countries with less onerous tax laws.

Last month it was revealed that Starbucks paid just £8.6million in corporation tax in the UK over 14 years.

Google has been accused of paying just £6million in tax in 2011 on revenue of £395million, while Amazon is domiciled in Luxembourg and paid no UK corporation tax last year despite being Britain's largest online retailer and generating sales here worth £3.3billion.

All the companies have maintained they fulfill all their legal tax obligations.

Tagged : No tags for this article

Headlines Newsview all

Playboy Model And Former Miss Bosnia Linked With 5 Murders And Multiple Robberies

A Playboy model and former Miss Bosnia has been extradited after being linked with five murders and a string of robberies that netted millions. Brunette Slobodanka ... Full story

N195b Pension Scam: EFCC Arrests Abdulrasheed Maina’s Secretary

The Economic and Financial Crimes Commission has made an important inroad in its effort to trace and bring to justice the former Chairman of the ... Full story

Chris Brown Stopped Paying Child Support After Being Denied To Meet Royalty

Chris Brown reportedly stopped paying $10,000 a month in child support to Nia Guzman after the singer was denied visitation with his daughter this week. ... Full story

9 Year Old Nigerian,Splendour Joe Abisoye Girl Writes A Book On Terrorism

9 year old girl Splendour Joe Abisoye has written a book on terrorism which she titled ‘Effects of Terrorism on Children’. Little Miss Splendour presented ... Full story

Ojo Boat Mishap: I Wish My Son Listened To His Grandmother - Veronica Friday

Corpses of the six pupils that died in the boat mishap in Ojo Local Government were yesterday recovered by the rescue teams and buried by ... Full story

How Oil Vandals Boat Killed 6 Lagos Schoolchildren

The motorised boat which crushed the canoe conveying some pupils in Irewe, Ojo, Lagos State, killing six of them, was carrying stolen fuel, PUNCH Metro ... Full story

Chloe Mafia Busts Out Of Her Tennis Whites

Chloe Mafia certainly aced her tennis outfit as she geared up for a very raunchy practice session. It looks like the fame-hungry star has picked up ... Full story

51 Year Old Sinitta Shows Off Her “V” In High Slit Dress

Sinitta had the sole intention of flashing some leg at RuPaul's Drag Race launch party in London last night - but not THIS much. The star ... Full story

I Don’t Mind Playing At Gay Events - DJ Jimmy Jatt

Ace Nigerian DJ, Jimmy Adewale Amu, aka Jimmy Jatt,has said he doesn’t mind playing at gay shows, as long as there is nothing attached to ... Full story

Boko Haram extremists kill 150 people praying in a mosque

Suspected Boko Haram militants killed nearly 150 people in northeastern Nigerian villages, mowing down men and children while they prayed in mosques and shooting women ...

President Buhari sacks Ita Ekpenyong, appoints Musa Daura as DSS boss

President Muhamadu Buhari on Thursday appointed Mr. Lawal Musa Daura as the new Director-General of the Department of State Security Service. He is to take over ...

Comment on: MPs accuse Starbucks boss of 'fiddling money out of this country' as he defends company's corporation tax bill of just £1.6m in 14 years

Rate this article

0

Breaking News

Manchester United Poised To Break Bank With Swoops For Schweinsteiger And Cavani

Bayern Munich have told German World Cup winner Schweinsteiger that he can decide on his future. United manager Louis van Gaal is determined to be reunited ... Full story

Real Reason Ini Edo Actually Travelled To Istanbul

Some months back, Nollywood actress, Ini Edo, was on vacation which many thought was a journey for a little rest and some shopping in Istanbul, ...

Pirated CD Seller Embarrassed Honourable Desmond Elliot in Lagos Traffic

Nollywood actor cum politician, Desmond Elliot, has disclosed how he was embarrassed in Lagos traffic recently by a movie seller who sells in traffic. According to ...

Halima Abubakar Warns About Body Transformation

Naturally endowed actress, Halima Abubakar, is so happy with the kind of body she has and as such decided to call on fans and friends ...

Majek Fashek Was A Loving Husband Before Taking To Drugs

Nigerian veteran Reggae singer, Majek Fashek, has been in the news steadily for some weeks now over the poor state of his health which has ...

Danny Glover, Set To Feature In Nigerian Movie With Bimbo Akintola

All is set for Hollywood movie icon, Danny Glover, to thrill and entertain Nigeria movie lovers in a home video. The foreign actor has been connected ...

Mavin Crew Singers Lands Mouth Watering Telecoms Deal

Mavin Records trio of Reekado Banks, Aphro Dija and Korede Bello have just landed a mouth watering deal with one of a telecommunication giant in ... Full story

Sunday Mba Joins Malatyaspor

Nigerian midfielder Sunday Mba has joined a newly promoted second tier Turkish side Yeni Malatyaspor. Mba, who scored Nigeria’s winning goal in the final match of ... Full story

Portland Trail Blazers Sign Nigerian Al-Farouq Aminu For $30m

Free agent Al-Farouq Aminu has reportedly joined the Portland Trail Blazers in a four-year deal for $30m. The Nigeria forward was linked with prospective clubs, which ... Full story

Freeze Of Cool Fm Acquires N17m Wristwatch

You can call him a fashionista or maybe a ‘show-off’ media personality, but this Cool FM presenter called Freeze is never bothered about how people ...