In the latest development in the mounting controversy over corporate taxes in Britain, Dutch authorities are denying claims by Starbucks’ CFO Troy Alstead that he couldn't discuss his company's tax arrangements in The Netherlands because he was "bound by confidentiality."
Alstead made the claim in an appearance before a British parliamentary committee in November, but Dutch Deputy Finance Minister Frans Weekers told other Dutch lawmakers earlier this week that there was no confidentiality arrangement, the Financial Times reports.
In a statement to The Huffington Post, Starbucks spokesperson Zack Hutson confirmed that there was no formal confidentiality arrangement. There is an expectation of confidentiality regarding the information Starbucks and the Dutch government shared, he said. “We believe this mutual understanding is an important underpinning of our professional relationship with the Dutch tax authorities as it is with all tax authorities we work with," he added. Hutson noted that Starbucks provided information on its Dutch tax arrangements to the UK parliamentary committee and that the information is publicly available.
Starbucks paid an average 16 percent tax rate over the past five years on royalties related to its Dutch subsidiary, according to the FT. That's below the Netherlands’ 25 percent top corporate tax rate.
At the November parliamentary hearing, British lawmakers grilled executives from Starbucks, Google and Amazon about how they managed to pay such low tax bills while still reaping billions in profits in the country. As a result of the outcry, Starbucks officials said in December that the company would pay about $16 million in taxes each year over the next two years -- or more than is required by law.
If Starbucks is getting a deal on its taxes in the Netherlands, it wouldn’t be the first company to do so. Yahoo and Dell are among companies using the country to funnel profits to island subsidiaries in order to cut their tax bills, Bloomberg reported in January.
The country reportedly started offering corporations “advance-pricing agreements” in the late 1970s, which allow multinationals to leave a small amount of income in the Netherlands that is subject to taxes in exchange for the ability to funnel its profits through the country.