Major firms quizzed over tax

The managing director of high street staple John Lewis has called on the Government to look at the way foreign multinational companies pay tax in the UK.

Andy Street said companies in overseas tax havens will "out-invest and ultimately out-trade" businesses paying full taxes in the UK.

He called on the Treasury to look into the "principle" that underpins where earnings are taxed - suggesting that UK companies are not competing on a level playing field.

His comments come just two days after bosses from Starbucks, Google and Amazon were were grilled by MPs over how they manage to pay little or no corporation tax on their UK operations.

All three repeatedly denied the accusation they were engaged in aggressive tax avoidance and were met with derision from members of the Public Accounts Select Committee.

A senior MP has urged consumers to boycott Starbucks, Amazon and Google in protest at what she says is "immoral" avoidance of UK tax.

Margaret Hodge backed direct action to punish the well-known firms after they failed to convince a Commons spending watchdog that they were paying a "fair share".

"I think one should boycott these companies. I do actually think that is the right thing to do," she said after leading a fiery three-hour grilling of executives.

Robert Oxley from the Taxpayers Alliance has told Daybreak that multinationals, such as Starbucks, Amazon and Google, "can afford the accountants and the well-paid lawyers to work their way around our tax system."

Amazon bosses are set to face though questions from the Commons Public Accounts Committee inquiry today over their tax strategies.

Amazon's main UK unit paid less than £1 million in income tax last year. The company had UK sales worth $5.3-7.2 billion, filings show.

Amazon allegedly 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, the report found.

Google will give evidence to Commons Public Accounts Committee inquiry today into taxation of multinational companies.

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 had a tax charge of just £3.4 million in 2011.

The company allegedly avoids UK tax by channeling non-U.S. 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.

Starbucks Chief Financial Officer Tory Alstead will give evidence to the House of Commons public accounts committee today, as will Matt Brittin, Chief Executive Officer of Google UK, and Andrew Cecil, Brussels-based Director of Public Policy for Amazon, a PAC spokesman said.

George Osborne has joined forces with the German finance minister, Wolfgang Schäuble, to announce an international crackdown on tax avoidance by multinational companies.

Osborne and Schäuble said they would back work by the Organisation for Economic Co-operation and Development to identify possible gaps in tax laws.

The joint statement by the two countries admits, that "international tax standards have had difficulty keeping up with changes in global business practices, such as the development of e-commerce in commercial activities."

The two countries add: "As a result, some multi-national businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated, thus minimising their tax payments compared to smaller, less international companies."

In the statement, Britain and Germany say they expect the first report from the OECD at the next G20 meeting in Russia in February 2013, reports the Guardian.