Starbucks paid no UK taxes in last three years
16 Oct 2012
Starbucks, the global coffee chain that has amassed over £3bn in sales has been slammed after it emerged that the US chain had paid no UK taxes for the past three years.
A Reuters report into Starbucks said that 'since it opened in the UK in 1998 the company has racked up over £3bn in coffee sales, and opened 735 outlets but paid only £8.6m in income taxes.'
The company employs a series of complex methods to minimise its profits and thereby its tax bill, such as paying big royalties to another part of the company for the privilege of using the brand name - at a rate of 6% of sales.
And in the past three years it has paid no UK tax at all despite amassing sales of £1.2bn.
In 2011, the company reported a £33m UK loss on sales of £398m and subsequently paid no corporation tax. It has repeated this series of losses year after year.
And in an entirely legal performance of accounting gymnastics, Starbucks has been able to cough up infinitely less tax to HMRC than other US food and drink chains like KFC and McDonalds.
The revelations have been widely condemned by politicians and tax campaigners alike, especially in the aftermath of the tax disclosures of fellow US giants such as Facebook and Amazon.
Accountant Richard Murphy of Tax Research, said: 'This shatters any suggestion that Starbucks is a good corporate citizen. It shows how multinational companies are operating under their own set of rules and have created an un-level playing field for locally-owned British businesses.'
The investigation revealed that Starbucks UK had made a loss of £52m in its 2009 accounts field at Companies House despite its chief financial officer Troy Alstead telling investors that the UK company was 'profitable'.
In 2010, it reported a £14m loss despite an upswing in sales, while in the year to September 2011, it filed a £33m loss.
Labour MP and tax campaigner Michael Meacher, said that the Seattle-based company's behaviour was 'extremely unfair' and that it was 'trying to play the taxman, game him. It is disgraceful.'
In a statement, a Starbucks spokesman said: 'We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have.
'There has been no suggestion by any authority that we are anything but compliant and good taxpayers. We do this in a way that is consistent with the values that have guided us since we were founded more than 40 years ago - balancing our need to operate a profitable business with a social conscience.'