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CBI Boss Calls For Reform Of Offshore Tax

(c) Sky News 2012

The head of Britain's biggest business body has told Sky News the "time has come" for foreign firms to pay their fair share of UK tax.

Confederation of Business Industry (CBI) director general John Cridland was speaking as the issue of corporate offshore tax arrangements moved into the political domain.

Mr Cridland told Sky News: "It's an issue whose time has come. The challenge is to be more transparent. I'd be surprised if the landscape isn't different in five years' time."

He also rejected the idea that HM Revenue and Customs is a "soft touch" and called for international tax rules and co-operation to tackle loopholes that allow large firms to minimise liabilities in certain jurisdictions.

The comments from the head of the CBI, which represents many of Britain's biggest firms, follow those of the boss of Dixons Retail (Other OTC: DSITF.PK - news) .

Sebastian James backed John Lewis chief Andy Street, who earlier told Sky News multinationals such as Amazon, Google (NasdaqGS: GOOG - news) and Starbucks (NasdaqGS: SBUX - news) would be able to use their tax advantages to invest more than their UK rivals.

In a statement on Twitter Mr James said: "I agree with Andy Street - retailers making profits in the UK should pay tax in the UK."

Mr Street told Jeff Randall Live the Treasury needed to do more to prevent the likes of online retailer Amazon "destroying the UK tax base" and potentially putting British companies out of business.

On Thursday Business Secretary Vince Cable told Sky there was "systematic abuse" of the tax system by some multinational corporations (MNCs).

He said MNCs were "playing governments off against each other" when it comes to tax structures with offshore accounting.

Mr Cable said he expected Chancellor George Osborne to address the issue of MNCs allegedly underpaying their tax in his Autumn Statement next month.

Dixons Retail has 1,200 stores, including PC World and Currys, and Amazon is a major rival.

These latest comments from British retail bosses come after UK heads of Amazon, Google and Starbucks appeared in front of MPs (BSE: MPSLTD.BO - news) in the Public Accounts Committee (PAC) earlier this week to defend their tax positions.

When grilled by PAC chair Margaret Hodge, Starbucks global chief financial officer Troy Alstead said his firm had only made a profit once in the 15 years it has been doing business in the UK.

"I assure you we are not making money," he told the committee.

"It's very unfortunate. We're not at all pleased about our financial performance here. It's fundamentally true everything we are saying and everything we have said historically."

Labour's Ms Hodge replied: "You have run the business for 15 years and are losing money and you are carrying on investing here. It just doesn't ring true."

Starbucks has reportedly paid just £8.6m in corporation tax in 14 years of trading in Britain. It was also revealed it has paid no corporation tax for the past three years, despite sales of £1.2bn in the UK.

Ms Hodge questioned how that could happen when a former chief financial operator said in 2007 that the division had an operating profit rate of 15%.

Mr Alstead denied knowledge of the statement and insisted the first profit Starbucks made was £6m in 2006.

Matt Brittin, the chief executive of Google UK, and Andrew Cecil, Amazon's director of public policy, also gave evidence to the committee.

Mr Cecil was forced to explain why a CD or a book bought in pounds on delivered from a UK warehouse by the Royal Mail is registered in Luxembourg.

"We have our European headquarters in Luxembourg... the books could be in the UK, they could be in France. If you are purchasing English books it is very likely they will be in our fulfilment centres (warehouses)."

Earlier in the year, The Guardian reported Amazon - Britain's largest online retailer - generated UK sales over the past three years of between £7.6bn and £10.3bn, but paid virtually no corporation tax.

Google's UK unit paid just £6m to the Treasury in 2011 on revenue of £395m, according to The Daily Telegraph.

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