Starbucks' CFO, tax and the riled up MPs

CFOs would have eagerly watched the performance of Starbucks' finance chief Troy Alstead in front of the House of Commons public accounts committee.
Alstead, along with other from Amazon and Google, was there to answer questions on their UK corporation tax contributions.
Branded: revealing the intellectual property that costs so much, Brompton Road, London

We know how this is done. Create a group structure with companies in different countries and have units in higher tax states make transfer payments to units in low tax nations for things like intellectual property. The scheme is as old as the hills, and perfectly legal.
The Financial Times concludes this:
The reality is that Starbucks is doing poorly in the UK. Local rival Costa Coffee is running (coffee) rings round it. And if some multinationals pay low levels of corporation tax in the UK and other markets, it is the fault of governments, not businesses. They talk up multilateral crackdowns on avoidance while individually trying to lure footloose company registrations with loopholes and low headline rates.
The operating loss stood at £28m, £25m accounted for by the payments mentioned above. Why wouldn't a company do that if it is legal? As the FT writes, it is not the companies that are the issue, it is why government continues to allow this situation to persist. Perhaps the public accounts committee should have called George Osborne to answer questions on why he has not instigated root and branch reform of the corporate tax system. Without that it's hard to see how things will change. In truth, as a result of the policy ambiguities highlighted by the FT, government is incoherent on the issue - sadly lacking in substance despite a lot of noise.
As for Alstead, he seemed well prepared and composed. Unlike his namesake city, he seemed unlikely to yield. Except the point that he wished Starbucks was making more money. But there was about as much froth as in a decaf flat white.


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