LONDON Dec 3 A committee of UK lawmakers has
called on government to crack down on multinational companies
that make substantial sales in Britain but pay little tax here,
echoing demands from leaders across Europe for measures to
tackle corporate tax avoidance.
The Public Accounts Committee (PAC) said on Monday the
government should set down rules limiting inter-company
transactions that reduce companies' tax bills, push for more
transparency in company reporting on tax and work with other
countries to limit profit-shifting across borders.
"Global companies with huge operations in the UK generating
significant amounts of income are getting away with paying
little or no corporation tax here. This is outrageous and an
insult to British businesses and individuals who pay their fair
share," said Margaret Hodge, who chairs the PAC.
The committee, which is charged with monitoring government
financial affairs, also criticised the UK taxman, Her Majesty's
Revenue & Customs' (HMRC), for being "too passive" with big
"Lenient treatment is given to big corporations, of which
almost half have a head office overseas," the PAC said in its
report on HMRC's annual accounts.
Last month the PAC grilled executives from Starbucks
, Google and Amazon over why they paid
little tax in the UK while taking in billions of pounds in
The committee said it found the evidence it received was
"unconvincing, and in some cases evasive".
Starbucks said it had always complied with UK tax law but
revealed on Sunday that, in response to the public outcry around
its tax arrangements, it was looking at changing these.
Amazon said it complied with the tax rules, but declined to
comment on the committee's findings. Google declined to comment.
The recent UK focus on tax avoidance follows a Reuters
investigation into Starbucks that showed it paid no UK
corporation tax in the past three years and had told investors
it was profitable while reporting big losses to the UK taxman.
With governments across Europe running big budget deficits
due to the financial crisis and global economic slowdown, tax
avoidance has moved to the top of the political agenda.
Tax campaigners and groups opposed to austerity measures
have pushed the UK government to lean more heavily on big
businesses to close the budget gap.
However, even some big UK businesses are taking exception to
the way some of their rivals paying much lower tax rates.
In recent weeks, senior executives from department store and
grocery chain John Lewis and from WM Morrison
Supermarkets have called for a level playing field on
tax between domestic businesses and multinational rivals such as
Amazon pays little income tax in the UK because it channels
UK sales through Luxembourg, which offers some of the lowest
effective tax rates in Europe.
The committee acknowledged such concerns.
"We are concerned that multinationals have an unfair
competitive advantage over British businesses which have no
choice but to pay their corporation tax," the PAC report said.
The French government said last month that it was discussing
new measures to tax internet companies such as Amazon and
Google, which minimises its tax bill by booking sales through an
British Finance Minister George Osborne announced last month
that he had teamed up with his German counterpart to lead a push
in the Group of 20 economic powers to make multinational
companies pay their "fair share" of taxes.
However, in a separate report released on Monday, charity
War on Want said Osborne's plans to enact a new anti-tax
avoidance law next year would have no impact in reducing the
kinds of tax reduction techniques employed by Amazon, Google and
Unions and tax campaigners have already criticised the
planned General Anti-Abuse Rule for being too narrowly targeted.