What Does the Tax Man Want From Starbucks, Google, and Amazon?
Unsurprisingly, an invitation from the United Kingdom’s Public Accounts Committee to answer questions regarding their tax practices was met with little enthusiasm from Google (NASDAQ:GOOG), Starbucks (NASDAQ:SBUX), and Amazon (NASDAQ:AMZN).
The British parliamentary committee asked senior officials to attend a hearing scheduled for November 5. However, Google said its representative would be unable to attend, and both Amazon and Starbucks failed to return calls and emails, according to Reuters.
A spokesman for the committee told the publication that none of the companies declined to attend on principle.
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Starbucks has drawn the most fire for its tax practices in recent months, but Google and Amazon have received criticism as well. Reuters reported in late October that Starbucks made a deal with Her Majesty’s Revenue and Customs tax office that allowed the company to almost eliminate its tax bill by deducting royalties the coffee chain paid itself for using its own name. Furthermore, Starbucks has paid only 8.6 million pounds of income tax on 3.1 billion pounds of sales since 1998, by reporting losses for the region. But while losses were reported to British authorities, the company told investors that the United Kingdom was a profitable market.
In previous inquiries regarding the tax practices in the United Kingdom, spokespeople said that their respective companies complied with the tax regulations in all countries they operate. But in order to avoid British income tax, Google has routed sales through an Irish subsidiary and Amazon through one in Luxembourg, as both countries have effective tax rates well below the U.K. rate of 24 percent. According to European Union laws, companies are allowed to sell from one country into another.
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