The business secretary Vince Cable has promised government action to tackle the apparent tax avoidance by multinational companies who aggressively structure themselves to pay little or no corporation tax in the UK.
Cable said that public anger over the issue was building up - and hinted that the chancellor would deal with the issue in the Autumn Statement.
'Some of them [multinational companies] seem to be avoiding tax systematically and this is deeply angering tens of thousands of British companies who do pay their tax properly, so we have to get to grips with it,' said Cable.
Earlier this week, Google, Amazon and Starbucks were grilled by angry MPs on the Public Accounts Committee for their aggressive tax avoidance.
Starbucks' UK operation made a loss of £52m in its 2009 accounts filed at Companies House, despite it telling investors that the UK company was 'profitable'. Google paid just £6m of corporation tax in the UK last year on a UK turnover of £395m and Amazon - the UK's biggest online retailer - amassed sales of over £3.3bn in the UK last year, yet paid no corporation tax on any profits.
Following on from the multinationals' humiliation, John Lewis managing director Andy Street called on the Treasury to seriously look into the aggressive arrangements of the companies, saying that it needed to level the playing field by taxing revenues earned in the UK.
'You have got less money to invest if you're giving 27% of your profits to the exchequer than, clearly, if you're domiciled in a tax haven and you've got much more,' he said in an interview with Jeff Randall on Sky News.
'So they will out-invest and ultimately out-trade us and that means there will not be the tax base in the UK. So I do think it's an issue that needs to be examined,' said Street.
His comments have now been backed by Dixons chief executive, Sebastian James, who said: 'I agree with Andy Street: retailers making profits in the UK should pay tax in the UK.'
Asda' chief executive, Andy Clarke, has come out defending the store's own arrangements which see it pay royalties to its US parent Walmart, for services delivered to Asda including information technology, and services from Walmart's online team based in San Francisco, the FT reported.
