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Amazon, Google And Starbucks Appear Before MPs To Discuss Corporation Tax

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MARGARET HODGE
Margaret Hodge is preparing to grill international corporations over their corporation tax payments to MPs | Getty Images

Leading chiefs from some of the UK's biggest companies will appear before MPs on 12 November to give evidence on the issue of tax avoidance.

Matt Brittin, chief executive officer at Google UK, Troy Alstead, Starbucks' global chief financial officer and Andrew Cecil, director of public policy at Amazon, are expected to tell the Public Accounts Committee that they have met all legal obligations.

The meeting comes days after the Telegraph revealed three of the UK's biggest water firms had paid next to no corporation tax over the past 12 months, with Thames Water and Anglian Water paying nothing in corporation tax in their latest financial year - despite reporting a combined operating profit of more than £1.1bn - and Yorkshire Water paying just £2.9m in corporation tax while generating an operating profit of £303m.

Chaired by Labour's Margaret Hodge MP, the hearing comes after months of public anger at multinational corporations paying less tax than smaller, UK-based companies.

Coffee giant Starbucks reportedly paid just £8.6m in corporation tax in 14 years of trading in Britain, and nothing in the last three years, compared to its UK rival Costa, which paid £15m, or 31% of its profits.

Mobile phone giant Vodafone has also paid no corporation tax in the last financial year, and America's top five technology companies, including Facebook, Amazon and eBay, legally avoided around £850m corporation tax last year.

And its not just the UK which is concerned - The Organisation for Economic Co-Operation and Development (OECD) is holding a public consultation in Paris in November 2012 on international tax systems, and has received 1,400 pages of comments on the subject.

Marlies de Ruitter, tax expert at the OECD, told the BBC there is a problem.

"We have seen countries creating tax incentives to attract investment," he said.

"We have also seen that countries are hesitant to introduce strict anti-avoidance rules, because if they are stricter than others, businesses will leave. An international, co-ordinated effort is needed."

Shadow Chancellor Ed Balls has also called for a clamp down on tax avoidance schemes used by employment agencies.

Speaking on his blog for PoliticsHome, Mr Balls said the move could even offset the need for a fuel duty rise.

"There is a growing problem with some employment agencies forcing workers to become employees of an umbrella company. They then falsely inflate the worker's travel and food expense claims, reducing tax and national insurance, and pocket the avoided tax as profits," he wrote.

"HM Revenue and Customs has forecast that these schemes cost the exchequer £650m a year. Recent estimates have now put it as high as £1bn a year. Even if only a proportion of that money was recouped it could pay for the fuel duty rise to be put off until next spring."

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Filed by Charlie Thomas