12/11/2012 14:55 GMT | Updated 13/11/2012 04:09 GMT

MPs Land Few Blows In The Debate On Corporation Tax With Amazon, Google And Starbucks

A hearing spanning almost three hours into how international companies pay income tax in the UK resulted in little progress as MPs struggled to land many blows on Google, Amazon and Starbucks executives.

Despite a highly engaging, and at times amusing discussion, the truth remained that all of the companies present complied with existing tax legislation, and were unmoved by the politicians' pleas that the lack of income tax paid in the UK was immoral.

Of the three representatives present at the hearing, Amazon's director of public policy Andrew Cecil looked the most uncomfortable, failing to answer several of the questions put to him by the committee.

Chaired by Margaret Hodge MP, the committee was astounded - and prompted to scoff audibly - when Cecil refused to detail how many of its European wide sales originated in the UK, telling MPs: "We have never broken out the figures on a country or a website basis."

Hodge retaliated with: "It's insulting to say you don't know what's happening in each territory - your entire activity is here but you only pay a tiny amount of tax."

Cecil also avoided answering how many jurisdictions were investigating Amazon over its tax regimes - a point quickly jumped upon by Twitter users:

The biggest laugh of the day was also at Amazon's expense when Labour MP Austin Mitchell told Cecil: "I'm a very satisfied customer of Amazon, and I like that when I buy a copy of John Major's biography, you suggest that I may also like '50 Shades of Grey'."

Cecil was also criticised for refusing to disclose where Amazon's holding company was based. An increasingly frustrated Hodge told Cecil: "You're not serious are you?" to which he replied: "Not at all" before correcting himself, adding: "I mean, I disagree."

Troy Alstead, Starbucks' global chief executive, faced the toughest challenge of the day; convincing the MPs present that in 15 years of trading in the UK, all but one of those years had resulted in financial losses.

Hodge tackled Alstead by asking: "If you've made losses over 15 years, what on earth are you doing business here (for)?"

Alstead replied that he was "not pleased" with the figures, but that Starbucks would continue to operate in the UK and aimed to turn a profit in future years.

He also faced a grilling over the financial operations of Starbucks - in particular, how a company which employs 8,500 UK employees across 700 coffee shops pays nothing in corporation tax.

The royalties made from the branding and intellectual property rights are paid into Amsterdam, which has a favourable tax rate that Alstead was not willing to disclose, before moving to the US.

Alstead maintained it was not simply the tax regime which saw its royalties and 25 staff centre in Holland, but also its roasting operation. Similarly, he claimed the fact that all of its coffee bean trading happened in Switzerland - which also has a low tax regime - was symptomatic of the wider commodities trading markets being centred there.

Google's vice president for northern and central European operations Matt Brittin performed well against the MPs.

His argument focussed on the explanation that Google Inc was an American operation, and since the vast majority of the science and engineering behind what makes Google and its products work was based in the US, that's where the corporation tax was paid.

In the UK, Google posted a revenue of £396m for 2011, with £6m paid in corporation tax from an accounting profit of £31m.

Brittin maintained that the 1300 people employed by Google UK were not involved in engineering or the science behind Google's operations, and therefore only the tax on the services provided in the UK - such as marketing, consultancy and some advertising, was liable for corporation tax here.

However, this claim was quickly challenged by more eagle-eyed users of Twitter:

Several attempts were made by MPs to ask about Google's Bermuda operations - a set up arranged to look after Google's intellectual property finances for all operations outside of the US - but fruitless questions about how it provided value for US shareholders (given you cannot buy shares in UK Google) showed up some MPs' ill education on how dividends work.

"The tax we pay in the UK has nothing to do with our affairs in Bermuda," Brittin repeatedly stressed. "The economic activity which comes out of the UK is paid for at a fair rate - but the technology which drives the advertising and underpins the advertising is based in the US."

On Twitter, many users were underwhelmed by MPs performance and critical of the lack of in depth questions being asked:

While the committee struggled to move the debate forward, the Organisation for Economic Co-Operation and Development (OECD) may have more luck - the body is holding a public consultation in Paris this month on international tax systems, and has received 1,400 pages of comments on the subject.