Well known multinational corporations Google, Starbucks and Amazon have been accused of “practising tax avoidance on an industrial scale” in the UK.
The UK Daily Telegraph reports:
The fiery exchange, led by Public Accounts Committee chairman Margaret Hodge, saw all three companies accused of siphoning profits away from Britain by using a complex web of accounting strategies that were cynical and “unjust”.
“We are not accusing you of being illegal,” said Mrs Hodge, “we are accusing you of being immoral.”
It was a rare sight watching top finance executives from these influential firms being relentlessly grilled by MPs.
Conservative MP Charlie Elphicke, who has been leading the criticism of US companies avoiding tax, said: “Billions of tax revenues are being lost to the UK. It’s clear from today that international tax avoidance is being conducted on an industrial scale.
“This is not just unfair on hard working honest UK taxpayers. It gives overseas companies an unfair competitive advantage over UK companies. That’s bad for our economic growth.
How do MNCs avoid paying tax? By using a host of accounting tricks to artificially inflate costs and/or reduce profits in the host country through the dubious use of transfer pricing and payments for intellectual property rights, royalty payments and other fees to sister companies located in third countries where tax rates are lower.
In this way, profits can be siphoned out of the host country to tax havens, thus avoiding tax at higher tax rates in the host country.
Has the Malaysian tax department scrutinised the transfer pricing of MNCs in Malaysia and the types of expenses usually found in their books?
How are certain foreign companies given tax free status for 12 years?
What is the effective tax rate these MNCs pay on their profits?