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

Sandra Ifudu - Maheeda Is Bad Egg To Our Society

 Since the rising of Maheeda into the entertainment industry, there has been a lot wagging about her, lifestyle, brand and others .Fast rising Gospel singer, ... Full story

T.B. Joshua to visit South Africa once a month ‘in memory of the martyrs of faith'

 Embattled Nigerian ‘Prophet’ T.B. Joshua declared in his church service today that he will be visiting South Africa once in a month ‘in memory of ...

Bishop David Oyedepo - Why I Charge High Tuition Fees At My University

The founder of the Living Faith Church, Bishop David Oyedepo, has defended the tuition fees charged by schools owned by the church, describing the provision ...

Femi Aribisala - Pastor Chris Oyakhilome's claim that men of God don't sin is NONSENSE!

If our marriage breaks down, we must not fool ourselves and others by insisting we are standing in the righteousness of God Christian pastors have become ...

Chibok Girls Tell Negotiator How They Are Raped Every Day

From a person who seems to have an insight into the operations of Boko Haram came chilling accounts of girls taken captive by the terror ...

Nigerian Pastor In Malaysia BUSTED For Running A 419 Scam Church

Wonders will never end.. Could this be the latest Scam Techniques in Malaysia? Using the Pastor's Format? This pastor was caught red-handed using his fake prophet ...

Boko Haram militants invade Borno market, kill scores, steal foodstuffs

Some members of the dreaded Boko Haram sect on Friday attacked a Borno market, killing scores of traders, a military source revealed. He claimed that the ...

Maimako Shepang, 35 Year Old Man Arrested For Selling His Wife

A frustrated 35-year-old man, Maimako Shepang has been cooling his feet in Plateau State police custody after he was apprehended for allegedly selling off his ... Full story

Ghanaian Pastor Claims T.B Joshua Sacrifices Human Lives In Order To Be Promoted In The Spiritual Realm

Do you think there may be a little truth in what this pastor is saying? Isaac Owusu Bempah of Glorious Word Ministry International (GWMI) in Accra ...

Boko Haram Militants Attack Kano College, 20 Killed, Several Injured

A bomb explosion which was preceded by sporadic gunshots left over 20 people dead and 40 injured in Kano on Wednesday. The explosion at the entrance ...

Nigerian soldiers celebrate after killing over 200 Boko Haram members in Konduga

Every time the Nigeria military reveal victory over Boko Haram, many readers are quick to ask for pictures, and that is why Nigerian troops this ...

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

Maheeda Is Bad Egg To Our Society- Sandra Ifudu

Since the rising of Maheeda into the entertainment industry, there has been a lot wagging about her, lifestyle, brand and others .Fast rising Gospel singer, ...

Finally! Lagos & Ogun State Schools to resume October 8

After much meetings and deliberations on the safety measures against the much dreaded Ebola virus, Lagos and Ogun state governments have ordered its private and ...

Why The Synagogue Building Collapsed - Military Expert

Unexplained Collapse Of A Newly Built Multi-story Building At the Synagogue Church Of All Nations In Nigeria.Remarks based on the known data of the case:Before ...

Family Is Something We Cannot Do Without- Charly Boy

Family is the most important part of individual lives, they are sometimes there and sometimes, they are not. Socialist and entertainer, Charly Boy Oputa wrote ...

I AM COMING TO SOUTH AFRICA – T.B. JOSHUA

Embattled Nigerian ‘Prophet’ T.B. Joshua declared in his church service today that he will be visiting South Africa once in a month ‘in memory of ...

How 3 women were saved from the claws of kidnappers in Calabar

Yesterday, September 20, will forever remain green in the memory of three men gang of kidnappers, as they were lynched by an angry mob along ...

Clarion Releases Photos That Gets Fans Throwing Negative Comments (photos)

Do you have a story/gist for publication? Please email it to story@nigeriafilms.com pearly... | 9/21/2014 7:27:21 PM That goes to tell you that one can never please ...

President Jonathan off to New York for a meeting with Obama

The President of Nigeria, Goodluck Jonathan today, Sunday September 21, leaves the country for New York, United States of America to attend the 69th Session ...

Neils Conveys Health Insurance Scheme to TAMPAN &ANTP

Ahead of the eventual roll out of the Nigerian Entertainment Industry Health Insurance Scheme (NEIHIS), a strong delegation of the Nigerian Entertainment Industry Lecture Series ...

Day I Was Embarrassed On Stage- Rita Edmond

Pretty, dark complexioned Egunine Rita Onyekachi Edmond is a young budding songstress in the Nigerian music industry.The slim and sexy entertainer signed to Bigspin Entertainment ...