Executives from Amazon and Google are set to be grilled by a parliamentary committee on how their UK operations pay tax.
Both internet giants have been criticised in recent months for making substantial sales in the UK, but only paying a small amount of tax to the Treasury – as little as 1.5 percent on hundreds of millions of pounds in some instances.
According to a Reuters report, the Public Accounts Committee has asked senior officials from the companies to address a hearing on 5 November. However, this could be delayed due to scheduling issues.
It is thought that Google’s representative will be UK managing director Matt Brittin.
In the six years leading up to the end of 2010, Google had paid a total of £8 million of corporation tax in the UK. Amazon, on the other hand, is asking its publishers to pay a full 20 percent of VAT on ebook sales in the UK – even though it only has to pay 3 percent to the Exchequer because it is based in Luxembourg.
This amounts to an extra £1.38 profit every time it sells a £10 ebook in the UK.
Responding to a question in the House of Commons this week, Exchequer Secretary David Gauke said that recent research suggests that the ebook market in the UK was worth approximately £140 million in 2011. However, he also admitted that the Treasury has no idea how much tax it collects on these sales.
Gauke said: “A large proportion of this business is supplied from abroad. Therefore, no reliable estimate has been possible for the value of VAT levied on the sale of e-books purchased in the UK.”
eBay also came under fire recently for only paying 0.15 percent of tax on sales worth some £798 million in the UK during 2010. An investigation by the Sunday Times found that the £1.2 million tax bill fell substantially short of the £51 million it would have paid if it had followed standard corporation tax guidelines.