It was a rare sight: top executives of three of America’s most famous multinationals — Google, Amazon and Starbucks — cowering in their seats and at a loss for words as MPs grilled them over allegations of tax avoidance by their companies.
There were angry exchanges during a three-hour fraught session of the House of Commons Public Accounts Committee as the executives struggled to explain their employers’ complicated tax arrangements that allowed them to minimise their liabilities in Britain.
“What’s your job?” asked an angry Margaret Hodge, chairperson of the Committee, after Amazon’s Andrew Cecil repeatedly failed to give answers to basic questions.
“It is just not acceptable ... we want proper answers to proper questions.”
“Deliberately evasive”
Mr. Cecil, who described himself as Amazon’s Director of Public Policy, was accused of being “deliberately evasive” and displaying “outrageous” ignorance when he failed to explain how much profit his company generated in Britain.
“Frankly, we think you manipulate your profits ... You’re not serious here. They have set you up. It’s outrageous,” Ms. Hodge told him.
The MPs said Amazon avoided U.K. taxes by reporting profits in low-tax jurisdictions like Luxembourg and losses in high-tax countries such as Britain even though it made most of its profits in Britain.
Representatives of Google and Starbucks fared no better.
Starbucks’ Tory Alstead was reduced to stuttering as MPs tore into him over allegations that the coffee giant reported losses even while it was making massive profits.
“Respectfully, I can assure you that there is no tax avoidance here,” Mr. Alstead insisted.
“It just doesn’t ring true,” retorted Ms. Hodge.
She then went on to tell him why his claims did not add up.
“In Switzerland, you [made] 20 per cent profits on every coffee bean bought in the U.K., on which you only pay 12 per cent tax; you have not been able to explain the 6 per cent royalty [paid to the Netherlands] ... you charge for loans to your own wholly-owned subsidiaries at least two per cent above the going rate. It seems to us you are exporting profits to minimise your tax,” she said.
Google’s Matt Brittin was forced to admit that his company was involved in a “complicated” tax arrangement but he insisted, “we comply with the law.”
Google’s job, he said, was to “manage costs efficiently to offer fair value to shareholders.” It operated in jurisdictions with low-tax rates such as Ireland and Bermuda.
He was told that his company was guilty of “immoral,” if not illegal, practices.
“We’re not accusing you of being illegal, we are accusing you of being immoral,” Ms. Hodge told him sternly.
