Starbucks about to pay more tax in the UK?

December 3rd, 2012 9 Comments By Andy Dawson

starbucks logo 300x300 Starbucks about to pay more tax in the UK?Following weeks and weeks of negative press coverage and some in-store unpleasantness, Starbucks has announced that it needs ‘to do more’ regarding the way it conducts itself regarding the UK tax that it pays. Which we think means that it’ll start putting more back into the coffers here, as opposed to filtering it away elsewhere and paying a lower rate instead.

We don’t know whether the coffee giant has been struck by an attack of its corporate conscience or whether there has been a noticeable effect caused by punters actively boycotting their branches and hitting it in its pockets. Perhaps it’s the fact that Treasury Minister Danny Alexander has got it on his ‘stink list’.

Starbucks bean-counters have been in talks with MMRC and the Treasury recently about the way it pays its taxes in the UK. At the moment, 4.7% of its earnings are paid to a Dutch subsidiary for the rights to use the Starbucks name and coffee recipe. All perfectly legal and above board, but it reduces Starbucks’ tax burden and is seen by some as a tad sneaky.

All told, Starbucks has paid just £8.6m in UK corporation tax since it arrived here 14 years ago, in spite of sales totaling £3bn – which our work experience kid Maths Mike tells us adds up to a tax rate of less than one per cent. Uh oh…

A Starbucks statement said: “Starbucks is committed to the UK for the long term. [We have] complied with all the tax laws in this country but have regretfully not been as profitable as we would have liked. We have listened to feedback from customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this, we are looking at our tax approach in the UK.”

We’ll wait and see if other tax scamps such as Amazon and Google follow in the footsteps of Starbucks and have a good, hard think about how they fill in their tax returns from now on…

Comments (9) Jump to most recent comment
  1. Posted by Her name was Lola December 3, 2012 at 11:41 am

    Despite being a Starbucks cardholder I’ve never been a regular customer but since the announcement of how little tax Starbucks pay in the UK I’ve made a conscious decision to take my custom elsewhere. I’m sure I’m not the only one and that Starbucks have seen a drop in their takings, forcing them to issue this “must do better” statement.

  2. Posted by Mr. Patel December 3, 2012 at 12:57 pm

    Step forward Boots and Vodafone.

  3. Posted by Tim B December 3, 2012 at 1:04 pm

    “We have complied with tax laws but have not been as profitable as we would like….we need to do more”

    In what way does this even remotely suggest that they’ll be paying more tax? All it says to me is that they’re going to try to be more profitable, and if they succeed then, by extension, they’ll pay more tax, but still no more than they’re legally obliged to pay (and who can blame them?)

    I really don’t understand this whole “Company pays the legal minimum tax, the cheap shysters” argument. OF COURSE THEY ONLY PAY THE FUCKING MINIMUM – THEY’RE A BUSINESS. If the minimum isn’t enough, change the law to raise the minimum.

    The reason this doesn’t happen is because higher tax will discourage businesses from investing in the UK, and if they leave, they’ll take their jobs with them. So instead, the government tries to blame the business for doing something that they’re entirely within their rights to do.

  4. Posted by Mike December 3, 2012 at 2:06 pm

    Tim B – I believe the point is that if Costa Coffee can compete in the same market place and still pay it’s fair share, why can’t Starbucks?

    It’s also a load of shite that these multi-nationals will pack up and leave if they’re forced to stop circumventing the tax laws. £3bn in sales over 14 years might not be much to you, but I’m sure their shareholders would have something to say about pulling out of the UK… Especially since the only reason they’re “not profitable” is because they’re siphoning off profits to other territories with lower tax levels!

  5. Posted by Ralph December 3, 2012 at 2:42 pm

    This is all pointless as the outgoings of the government are significantly larger than the income.

    All government handouts need to be stopped and NHS handed over to private companies.

  6. Posted by Mike December 3, 2012 at 6:35 pm

    To be honest , I think they do right !! HMRC allowed 44,000 businesses to avoid their tax & that worked out to be close enough to billions and they still havnt done anything about it , then you have the government raising every known f/ing bill ( everyone will be affected) speech by Cameron which bloody shut my business down and put 20 employees on benefits for Christmas & you wonder why the rich get richer ( the government gave the loophole in the first place) so good on you Starbucks , you make a nice coffee ..

  7. Posted by Tim B December 4, 2012 at 9:06 am

    Mike – I’m sure their shareholders would also have something to say if they turned round to them and said “Oh yeah, we don’t have to pay this much tax to the UK, but we thought it’d be nice of us to give them a bit of a boost”

    If there are entirely legal routes to pay less tax, then of course Starbucks are going to make use of them. If you could change banks and it magically dropped your PAYE from 40% of your income to 5%, and HMRC’s response was “Well, that’s perfectly legal, but we’d prefer it if you didn’t if it’s all the same to you”, your response would be “That’s unfortunate for you, but fuck off”, and you wouldn’t be alone. It’s not quite that simple for companies, but the concept is exactly the same – there is a legal route for them to pay less tax. If the government want them to pay more tax, they need to legislate to enforce that, not spit their dummy out in public.

  8. Posted by snigface December 4, 2012 at 12:32 pm

    I agree, in part, to what you said above – of course they are going to pay the least amount of tax. But when you consider that they don’t pay the living wage, and then only pay £8m in 14 years, the tax payers are effectively subsidising starbucks’ profits. we could lower our own corporation tax so that more companies see us a viable option, raise minimum wage to an effective and useful figure which would cut the benefit bill, and raise income tax so that if you earn more, you pay more.

  9. Posted by Gabriella December 5, 2012 at 9:17 pm

    I will believe this when I see it.

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