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Foreign companies face tax crackdown

David Cameron has demanded an investigation into large-scale tax avoidance enjoyed by international conglomerates.

The move has also prompted Brussels to look into European VAT loop-holes and ways in which they could be closed. The Prime Minister has said that HMRC should 'look carefully' at cases where international corporations have legally been able to pay no corporation tax - or very small amounts - on billions worth of revenue.

Cameron has said he is 'not happy' over the moral issue presented by the avoidance and reiterated his belief that companies should pay 'fair taxes'. However he labelled the problem 'international' by arguing that all countries are facing the same struggles to make sure companies pay tax in the 'appropriate way.'

The concern is that forcing companies to pay up will drive away investment in Britain by giants such as Amazon, Skype, Netflix and Starbucks - all of whom have been found to be taking advantage of tax loop-holes.

However, others point to Amazon having such a large advantage over retailers such as Waterstones, particularly as Waterstones are also forced to charge 20 per cent VAT. MPs have also insisted Starbucks be investigated for only paying £8.6 million in tax over 14 years of trading in the UK.

Professional experts such as Richard Asquith of TMF Group has argued that the situation arises out of tax being a 'national' issue but trade being 'global'. He argued companies are simply able 'to pick the best tax locations so anomalies arise.'

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