Starbucks: No UK Tax Paid Since 2009

Written By Unknown on Selasa, 16 Oktober 2012 | 20.48

Since opening its first coffee shop in the UK in 1998, Starbucks has racked up over £3bn in sales but shelled out just £8.6m in income taxes, according to new research.

In the latest example of tax avoidance by a multinational company, Reuters revealed that for the past three years the coffee chain reported a loss at its UK business.

As a result it paid no income tax in Britain - but over the same period, its sales hit £1.2bn.

By comparison, McDonald's paid a tax bill of over £80m on £3.6bn of UK sales, and KFC incurred taxes of £36m on sales worth £1.1bn.

There is no suggestion Starbucks has done anything illegal - according to accounts filed with Companies House, Starbucks has made no profit in the UK over the past 10 years.

But transcripts of investor and analyst calls over the period reveal the company has repeatedly said it is pleased with its UK business, which it described as "profitable".

The coffee chain has defended its actions, saying it pays the appropriate level of tax.

"Starbucks is totally committed to the UK, which continues to be one of our most important markets," a spokesperson said.

"We will continue to pay our fair share of taxes to the letter of the law in the UK as we always have.

"This is in keeping with our values as a business, holding ourselves to the highest ethical standards, be it in the way we source our coffee or pay our taxes."

Its overall tax rate globally last year was much higher than average at 31%.

But on overseas income, Starbucks paid an average tax rate of 13% - one of the lowest in the consumer goods sector.

The chief executive of the TaxPayers' Alliance, Matthew Sinclair, said companies exploit loopholes because the UK's tax system is too complicated.

He told Sky News: "There has been a succession of companies from high street names to internet giants who, thanks to the labyrinth of our tax system, appear to be paying much less in tax than many people would expect."

Starbucks, which has a market capitalisation of $40bn (£24.8bn), has a low UK tax rate because of a number of complicated corporate measures.

For example, its overseas operations have to pay a royalty fee - 6% of total sales - for the use of its "intellectual property", including its brand and business processes.

It also buys its coffee beans for its European divisions through a firm based in Lausanne in Switzerland, and the beans are shipped to Amsterdam to be roasted before they reach the UK.

As a result, Starbucks allocates some profits from its UK sales to these Dutch roasting and Swiss trading units.

Mr Sinclair called for a radical overhaul of Britain's tax system to make it simpler.

"Tinkering is not enough; we have one of the most complicated tax codes in the world which is an incredible burden to administer," he said.

"If Britain wants to remain competitive and ensure everyone pays their fair share then we need radical reform that restores legitimacy to our tax code and kick starts economic growth."

HM Revenue and Customs said it cannot comment on the tax affairs of individual businesses.

"We make sure that multinationals pay the right tax to the UK in accordance with UK tax law," it said in a statement.

"Our tax rules combat tax avoidance, and we employ specialist tax professionals to ensure that MNs play by the rules."


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