Tax clampdown defrothed - FT.com Online shopping supposedly hits a pre-Christmas peak today, with sales close to £500m, according to Experian. Plenty of the total will go through the UK website of Amazon, one of three US multinationals whose minimalist approach to paying UK corporation tax has prompted George Osborne to announce £77m in extra spending on anti-avoidance. The laws that allowed Amazon to pay just £1.8m in local corporation tax in 2011 date back to the 19th century, according to John Whiting of the Chartered Institute of Taxation. They established the principle that a tax charge occurred in the country where a sale was made. As a result, British consumers transact online with Amazon's subsidiary in lightly-taxed Luxembourg, not the UK offshoot that picks and packs their Christmas DVDs and celebrity autobiographies. Thanks to a similar set-up, Google, a big vendor of advertising services to British business, paid UK corporation tax of just £6m in 2011. Its billing subsidiary is based in Ireland, another low-tax regime. The "clampdown" announced by the Treasury on Monday will have zero impact on online operators such as Amazon and Google, says Michael Devereux of Oxford university. Nations would need to renegotiate their tax treaties to close the loophole. A more aggressive stance might extract more tax from Starbucks, though. Inter-group transfers approved by HM Revenue & Customs are responsible for the bulk, and perhaps even the totality, of UK losses that exempt the group from corporation tax. The frothy coffee vendor already appears willing to reduce these transfers. How well would the transfer pricing strategies of British multinationals stand up to critical foreign scrutiny? Badly, one fears.