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…