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
Obafemi Awolowo University student tries to flush her new born baby down the toilet in school hostel
According to unconfirmed reports gathered today this from students of Obafemi Awolowo University, a female student of the school gave birth in the Moremi Hostel ...
More than 32 persons were reported killed in the early hours of Tuesday when gunmen numbering about 150 attacked Kizara village in the Tsafe Local ...
The Police in New York on Tuesday arrested a suspect in connection with the killing of a Nigerian cab driver in the Brownsville area of ...
Rate this article
Ghanaian screen goddess, Nadia Buari who received two nominations for Best Actress in a Leading Role at the African Movie Academy Awards in 2007 and ... Full story
Letter to my beloved son “Time does fly I never want this to go unsaid There are no words to express how much you mean ... Full story
Chidinma Ekile 'Miss Kedike' who has remained highly sought after with her songs after winning the MTN Project Fame West Africa in 2010 in a ... Full story
Tertiary institutions across the country, yesterday, declared that they could only admit 704,000 students out of more than 740,000 candidates who are qualified to be ...
The Executive Vice Chairman/CEO of NASENI, Engr. Dr. Mohammed Sani Haruna, riding on the made-in-Nigeria motorcycleOnly recently President Goodluck Jonathan inaugurated the National Space Council ...
This year alone, there are more than six marriage break in an industry that we have just a few married couples. One of the actors ...
When the whole crisis surrounding Laide cropped up, a lot of reactions followed it but just recently, through her publicist, she sent a word across ...
I think I have to drop this pen and enter into vocal booth to record a song if the amount our artistes rake is this ...
Against all odds, former Mavin Records artiste, Wande Coal will perform at the DKM Concert organised by D'Banj. The event, which will hold on June ...
Come this Saturday, one of Nollywood heavyweights, Chinedu Ikedieze popularly known as Aki, will be burying his father in far away Abia State. Already, some ...