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Google and Amazon execs to face tax grilling from MPs

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Technology giants Google and Amazon are to face a grilling today over why they only pay small amounts of tax in Britain despite generating billions of dollars in revenue here.

The Public Accounts Committee (PAC) has invited representatives of the two firms, along with coffee shop chain Starbucks, to give evidence amid growing public concern over tax avoidance by major international companies.

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Many corporate giants reduce their tax bill by redirecting income to places where the tax rate is lower. Whilst there is nothing illegal about such activity, it is considered to be at least morally suspect.

Margaret Hodge, Labour MP and chair of PAC, said of the current corporate tax system that "it is hard for the ordinary person to believe it's fair".

She added: "It makes people incredibly angry in the current fiscal climate."

Last week, Britain and Germany announced plans to lobby the G20 economic powers to force multinational companies to pay their "fair share" in taxes.

Google's tax filings show that it had $4 billion in sales in the UK last year, but its main UK unit had a tax bill of just £3.4m.

The search giant avoids UK tax by channelling its non-US sales into an operation in Northern Ireland, where the corporate tax rate is lower than countries such as Great Britain.

Amazon avoids UK taxes by diverting European sales through a Luxembourg-based unit. The company is understood to have paid UK income tax of £1m last year, but filings show it had sales here worth up to $7.2 billion.

Google and Amazon declined to comment on the situation.

Reuters recently revealed that Starbucks had paid no corporation tax at all in the UK over the past three years, and had paid just £8.6 million in total UK tax over the past 13 years, despite recording sales of £3.1 billion.

A Starbucks spokeswoman said: "We are committed to being transparent on this issue and look forward to appearing before this committee."

Starbucks chief financial officer Tory Alstead will give evidence to the committee at 3.15pm today, as will Google UK chief executive Matt Brittin and Andrew Cecil, the director of public policy for Amazon.

Speaking to the Sunday Telegraph, Hodge expressed her belief that the government should implement a new revenue-based tax system to ensure corporate profits are not funnelled out of the UK.

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