PAYING corporation tax is not “a voluntary choice” for multinational firms, the UK’s chief finance minister Danny Alexander has said in a stark warning to companies minimising their payments such as Starbucks, Amazon and Google.
The minister’s attack on tax avoidance came as it emerged that computer giant Microsoft avoids paying UK corporation tax on more than £1.7 billion a year of revenue.
Microsoft was reported to have transferred the bulk of the cash to the firm’s HQ in Ireland, with profits then routed to Bermuda to avoid paying corporation tax in the UK.
Tax dodges by powerful corporations have sparked widespread public anger, with protests staged at outlets of the coffee chain Starbucks at the weekend over the firm attempting to minimise its tax bill in the UK.
Mr Alexander suggested some multinationals viewed corporation tax “like the church plate going around on a Sunday morning” as Starbucks promised to pay £20m over the next two years after it emerged the firm was not paying the tax.
The Chief Secretary to the Treasury insisted that the coalition government was continuing efforts to tackle tax avoidance and that this work was taking place both in the UK and abroad.
The Lib Dem MP said: “Taxation for big companies, or for anyone in society, can’t be, and mustn’t be, a voluntary arrangement. Thinking of the tax system as if it is like the church plate going around on a Sunday morning is completely the wrong way to think about it.”
He added: “Paying tax is not a voluntary choice, it is not something you can just choose to do willy-nilly, because you think it will please your customers, it is an obligation.”
However, the Conservative mayor of London Boris Johnson attacked “sneering” at Starbucks as the chain admitted it had been forced to close a “small handful of stores” due to the protests organised by tax avoidance campaigners UK Uncut.
Mr Johnson said that people should praise Starbucks for “stepping up to the plate” and giving more back to society.
He said: “Imagine that you are the corporate finance director of one of these companies. Your job is to look at the law as it stands. Your fiduciary duty to your shareholders is to minimise your tax exposure.
“It is not to say: ‘This looks pretty bad, we had better write a huge cheque to the government ex-gratia and show that we are good citizens.’
“Companies do not work like that. It is very, very difficult for a finance director in a company to know how to behave in these circumstances.
“He could be sacked if he makes some crazy submission to the Revenue for far more tax than the company is liable for.”