LONDON -- British lawmakers on Monday accused major multinational companies of aggressive tax avoidance, amid calls by the U.K. government for a global crackdown on firms which seek to evade tax.
Lawmakers scoffed as Troy Alstead, Starbucks global chief financial officer, claimed that the fact the coffee giant had reported losses for all but one of the 15 years it has operated in the U.K. was down to poor performance -- and not an attempt minimize its taxes in Britain.
"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," said Margaret Hodge, head of parliament's Public Accounts Committee.
Alstead acknowledged to the panel that its taxable profits in the U.K. are calculated after royalties paid to its European headquarters in the Netherlands have been deducted. He said that Starbucks had a special tax arrangement with the Dutch government covering its headquarters, but declined to give details.
"Respectfully I can assure you there is no tax avoidance here," Alstead told the panel.
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Alstead insisted that Starbucks was not seeking to mislead investors or tax authorities about its performance in Britain.
"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," he told the committee.
Last week, Britain and Germany called for the world's largest economies to do more to collaborate to fight tax evasion, particularly in online commerce.
Hodge told witness Andrew Cecil, public policy director at Amazon, that many people in Britain are angered over the low tax rates paid by the retailer.
"Your entire activity is here yet you pay no tax here and that really riles us," she said. Cecil declined several times to tell the committee the level of Amazon's sales in the U.K.
"We have not disclosed those figures ever publicly," he said.
However, Amazon's annual reports do disclose this figure. The most recent regulatory filing gave U.K. revenues as 11-15 percent of total sales in 2011, an amount equal to $5.3 to $7.2 billion.
Amazon did not respond to emails or calls asking for explanations about the discrepancy.
"It's just not acceptable ... It's outrageous," the committee's chairman, Margaret Hodge MP, said of Cecil's inability to answer questions about Amazon's UK sales and corporate structure.
Amazon's main U.K. unit paid less than 1 million pounds in income tax last year.
Amazon avoids U.K. taxes by reporting European sales through a Luxembourg-based unit. This structure allowed it to pay a tax rate of 11 percent on foreign profits last year -- less than half the average corporate income tax rate in its major markets.
Matt Brittin, Google Vice President for Sales and Operations in Northern and Central Europe, acknowledged the company did cut its tax bill by channelling profits from European sales through Bermuda but said this was perfectly legal.
Google's filings show it had $4 billion of sales in the U.K. last year, but despite having a group-wide profit margin of 33 percent, its main U.K. unit reported a loss in 2011 and 2010.
It had a tax charge of just 3.4 million pounds in 2011.
The search engine provider books European sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-U.S. profits last year.
Google is under audit by the French tax authority regarding its structure. The company denied a newspaper report last month that it had received a back tax claim for 1 billion euros.
Reuters contributed to this report