Starbucks Makes Pledge to Build U.K. Public Trust on Tax Affairs
Starbucks Corp. (SBUX), the world’s biggest coffee-shop operator, pledged to build public trust in the U.K. after lawmakers criticized the firm for not paying any corporation tax for the last three years.
The firm is in talks with the U.K. Treasury over its tax affairs and will release details of the discussions this week, the Seattle-based company said today in an e-mailed statement. Starbucks has complied with all U.K. tax laws and is committed to the country for the long term, it said.
“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 said. “As part of this we are looking at our tax approach in the U.K.”
Corporations including Starbucks, Amazon.com Inc. (AMZN) and Google Inc. (GOOG) have come under attack from British lawmakers and protestors for using complex accounting methods to minimize tax liabilities in the U.K. while running large operations in the country. The government will invest in the part of the tax office that tackles evasion by multinational companies, Chancellor George Osborne said today.
“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” today. “But we have got to make sure we have taxes that don’t drive businesses out.”
Starbucks paid no income taxes on revenue of 1.2 billion pounds ($1.94 billion) over the past three years by using intra- company transfers and loans to record a loss for its British business, Reuters reported Oct. 15, citing company filings. There is no suggestion the Seattle-based company has broken the law in the U.K., its biggest European market.
The coffee-shop operator eliminated a 5 million-pound corporation tax bill by paying a royalty fee of 4.7 percent of its U.K. revenue to its Dutch division for a license to use its brand, the Sunday Times reported today, without saying where it got the information.
Starbucks Chief Financial Officer Troy Alstead angered U.K. lawmakers last month by refusing to publicly disclose details of a low-tax rate granted by the Netherlands at a parliamentary hearing. In the past three years, the company has paid more than 160 million pounds in employee, national insurance and business rates tax, he said.
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