Starbucks says may pay more UK tax

LONDON Sun Dec 2, 2012 12:53pm EST

St Paul's Cathedral is pictured behind signage for a Starbucks coffee shop in London October 8, 2012. Picture taken October 8, 2012. REUTERS/Luke Macgregor

St Paul's Cathedral is pictured behind signage for a Starbucks coffee shop in London October 8, 2012. Picture taken October 8, 2012.

Credit: Reuters/Luke Macgregor

LONDON (Reuters) - Coffee chain Starbucks said it was considering changes to its UK tax practices, which allowed it to make billions in revenue while paying little in income taxes, following criticism from lawmakers, tax campaigners and the media.

A Reuters examination of Starbucks accounts published in October showed the company had reported 13 years of losses at its UK unit, even as it told investors the operation was profitable and among the best performing of its overseas markets.

The chain's UK unit paid no corporation tax - a tax on a company's income - in the last three years for which figures are available and has only paid 8.6 million pounds income tax since 1998, despite racking up 3 billion pounds ($4.8 billion) of sales.

The revelations led to calls for a boycott of the store and protests at its branches, and the company's Chief Financial Officer Troy Alstead was called to give evidence to a parliamentary committee.

Starbucks repeated on Sunday that it had always complied with British tax laws and blamed its low tax payments on a tough operating environment in the UK.

However, a spokeswoman added in an emailed statement that the public mood had caused the company to reconsider its tax arrangements, which include intercompany royalty and interest payments that reduce the UK unit's taxable profit.

"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," she said.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with The Treasury," she added.

The company, the largest coffee chain in the world, with a market value of $39 billion, said it would release more details later this week.

The Public Accounts Committee, which grilled Alstead and managers from Google and Amazon over their tax planning, is due to release its report on corporate taxation in the UK on Monday.

($1 = 0.6240 British pounds)

(Reporting by Tom Bergin; Editing by Will Waterman)

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Comments (4)
randburg100 wrote:
That’s very big of them…though I suppose the alternative is that they are boycotted in the UK – then they won’t need to pay tax as their profits will vanish!

Dec 02, 2012 1:02pm EST  --  Report as abuse
Wow, almost $5 Billion in sales in the last 10+ years in the U.K. alone, selling coffee and its accompaniments.

I wonder what their net profit was in the U.K. Maybe I’ll open a lemonade-stand franchise. Call it “Tarties”.

Dec 02, 2012 2:09pm EST  --  Report as abuse
Taxes are legalized theft. I’m all for any company who can avoid as much of it as possible. I only wish I could stop them from stealing from me and not be imprisoned for it. But we all know that government theft becomes law while individual theft is a crime. Kudos Starbucks!

Dec 02, 2012 3:41pm EST  --  Report as abuse
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