UK lawmakers slam Amazon and Google on tax

British lawmakers criticise executives of Amazon and Google for paying only small amounts of tax in the United Kingdom while racking up billions of pounds in sales.

LONDON, UNITED KINGDOM (NOVEMBER 12, 2012) (PARLIAMENT TV) - UK lawmakers criticised executives of Amazon and Google on Monday (November 12) about how they have managed to pay only small amounts of tax in Britain while racking up billions of pounds worth of sales.

Britain's Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.Members of the committee repeatedly criticised Andrew Cecil, Brussels-based Director of Public Policy for internet retailer Amazon, for failing to answer questions about the group's operations.

Cecil declined several times to tell the committee the level of Amazon's sales in the UK.

"We have not disclosed those figures ever publicly," he said.

The committee's chairman, Margaret Hodge MP, said it was outrageous that someone with Cecil's job couldn't answer questions about Amazon's UK sales and corporate structure.

"What I think what we're going to have to do is order somebody to come who can give us answers to the questions we ask and we will order somebody to appear before us who does that, because it's just not acceptable, I don't know what you take us for, but we need proper answers to perfectly proper questions." she said.

Amazon's main UK unit paid less than 1 million pounds in income tax last year.

Amazon avoids UK 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.

Amazon received a $252 million back tax claim from the French tax authority in September, related to its practice of channelling European sales through Luxembourg. The company said it was fighting the claim, referred to by Cecil at the hearing.

Matt Brittin, Google Vice President for Sales and Operations, 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 UK last year, but despite having a group-wide profit margin of 33 percent, its main UK 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, but the company denied a newspaper report last month that it had received a back tax claim for 1 billion euros

Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes.

Amazon received a $252 million back tax claim from the French tax authority in September, related to its practice of channeling European sales through Luxembourg. The company said it was fighting the claim, referred to by anAmazon official at the hearing.