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Starbucks to reconsider its no-tax status in the UK

The coffee chain angered the UK public by making billions in profits but paying next to nothing in taxes.

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Starbucks said it is in negotiations with the UK Treasury over how much it pays in corporation taxes. The coffee chain angered the UK public by making billions in profits but paying next to nothing in taxes. (Christopher Furlong/Getty Images)

Starbucks said that it will take a look at its tax policy in the UK after lawmakers and tax campaigners complained that the coffee giant earned billions in profits but paid next to nothing in taxes.

Reuters examined Starbucks accounts and reports that the company showed 13 years of losses in the UK when it told investors it's British unit was extremely profitable.

Reuters reports that the UK unit paid no tax on its income in the last three years for which figures were available and paid only £8.6 million ($13.7 million) in income tax since 1998. In that time, Starbucks in the UK earned £3 billion ($4.8 billion) in sales.

The coffee chain told Bloomberg Businessweek that it is in talks with the UK Treasury over its tax status and will release the details of the discussion this week.

Starbucks noted that it has complied with all UK tax laws and is committed to the country for the long term.

“We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more,” Starbucks told Bloomberg. “As part of this we are looking at our tax approach in the U.K.”

Chancellor George Osborne has pledged more support for the British authorities trying to tackle tax avoidance by multinational corporations,reports the BBC.

In November, a Public Accounts Committee heard evidence from executives from Starbucks, Google and Amazon over the amount of tax the companies have paid in the UK. The committee is expected to release a report on its findings on Monday.

“I completely understand people’s anger when they see people not paying their fair share of taxes,” Osborne said in an interview with BBC Television’s “Andrew Marr Show”. “But we have got to make sure we have taxes that don’t drive businesses out.”

The BBC said the coffee company uses an accounting tactic to avoid paying corporation taxes on the £400 million it earned in the UK last year.

"Much of the money it earns in this country is transferred to a sister company in the Netherlands in the form of royalty payments, leaving the UK division to report regular annual losses."

http://www.globalpost.com/dispatch/news/regions/europe/united-kingdom/121202/starbucks-reconsider-its-no-tax-status-the-uk