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
- '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'
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
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.
Headlines Newsview all
He is an outspoken Nigerian who is not ashamed to declare his sexuality as being ‘GAY’ to any ear that cares to listen to his ... Full story
Rate this article
Ex-coach of the Nigerian Super Eagles, Musa Abdullahi passed away on Sunday January 25, 2015. Abdullahi coached the Nigerian under 17 and 20 teams (Golden Eaglets ... Full story
Driving his re-election campaign train beyond the terrain of social, entertainment, sports and agricultural sectors, President Goodluck Jonathan, on Sunday, January 25, 2015, had an ... Full story
Producer Lisa Omorodion had another movie premiere for First Cut at Silverbird Cinemas in Lagos on Friday Jan 23rd. I wasn't really impressed by the looks ... Full story
The Managing Director, Afrinvest West Africa Limited, a research and investment advisory firm, Mr. Ike Chioke, tells how falling oil prices will pose challenges to ... Full story
At a point, she was addressed as a ex-actress because shortly after beautiful Nollywood diva, Caroline Ekanem Danjuma, married her billionaire husband, Musa Danjuma, they ...
Few days after Nigerian songstress, Omawunmi Mgbele said "I Do' legally to her long time off and on boyfriend, Tosin Yusuf, the 'If you ask ...
A person who never made a mistake never tried anything new, for a journey of a thousand mile begins with a step. These is a ...
Argument arouse when an artiste who look like Tuface was signed into Kennis music after Tuface left the record label. Many said it was same ...