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Google, Amazon and Starbucks to face inquiry from UK legislators over alleged tax avoidance

Google, Amazon and Starbucks to face inquiry from UK legislators over alleged tax avoidance

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Executives from Google, Amazon, and Starbucks will field questions from UK legislators today, amid allegations that the companies aren't paying their fair share of domestic taxes. As Reuters reports, Google UK CEO Matt Brittin, Amazon Public Policy Director Andrew Cecil, and Starbucks Global CFO Troy Alstead will present evidence Monday afternoon to Parliament's Public Accounts Committee (PAC), which is responsible for overseeing government finances.

At issue is an apparent discrepancy between the companies' global profits and their UK income taxes. Google, for instance, reported $4 billion in UK sales in 2011, but paid just $2.1 million (£1.3 million) in UK taxes, due to the fact that it funnels all non-US income through its Irish subsidiary. Amazon uses a similar strategy to keep its UK tax rate low, channeling European sales through a subsidiary based in Luxembourg. Last year, the retailer reported UK sales worth between $5.3 billion and $7.2 billion, on which it paid less than $1.6 million (£1 million) in taxes.

"It makes people incredibly angry."

Google first came under fire for its UK tax practices in 2010, but scrutiny has intensified in recent months. In August, British MP John Mann lashed out at Google, describing the company's scheme as "entirely improper and immoral," and calling for a Parliamentary inquiry "sometime before Easter." Amazon has faced similar criticism since transferring ownership of its UK business to a Luxembourg-based company in 2006, and in the US, was recently forced to begin paying sales tax within several states. The company hasn't discussed its tax practices in detail, though in a 2006 SEC filing, it acknowledged that the transfer of its European headquarters "will benefit our effective tax rate over time."

Thus far, there's no indication that any of these companies have actually violated the law, though Parliamentary involvement suggests that the government may be looking to implement structural changes to its tax code — particularly at a time of nationwide fiscal austerity. "It is hard for the ordinary person to believe it's fair," PAC chairman Margaret Hodge told Reuters. "It makes people incredibly angry in the current fiscal climate."