What is in this article?:
- Starbucks and Google charged with not paying enough British corporate tax
- Government body that collects taxes denies being soft on multinational firms
- Representatives from Amazon, Google and Starbucks face grilling from government body next week
Pressure is mounting on multinationals, notably Google and Starbucks, to justify the amount of tax they are paying in Britain amid accusations that the levels are far too low.
According to figures cited by Conservative MP Charlie Elphicke, Google paid only £3.4 million (US$5.4 million) in British corporation tax last year on revenues totaling about £2.5 billion, while Starbucks did not pay a penny on sales worth £400 million.
Starbucks has confirmed not paying any corporation taxes in Britain for the past three years owing to fees paid to other areas of its business, such as royalty payments for the use of its brand.
This resulted in the company posting a series of losses and not having to pay any corporation tax.
Corporate Tax Issue Gains Momentum
The thorny issue gathered momentum last week at a gathering in Mexico of finance ministers and central bankers from the Group of 20 developed and emerging nations.
British Finance Minister George Osborne and his German counterpart Wolfgang Schaeuble called in a joint statement for "concerted international cooperation to strengthen international standards for corporate tax regimes."
However, Chancellor of the Exchequer Osborne also insisted that those strong standards must not deter large international companies from making vital investments.
Google has come under closer scrutiny in several European nations where cash-strapped governments are increasingly wary of being shortchanged on tax revenue.
According to a newspaper report in France, French tax authorities have made a billion-euro (US$1.3 billion) claim against Google over financial transfers between an Google holding company in Ireland and its French unit.