Starbucks set to pay tax – at last: Coffee giant bows to pressure from angry consumers and MPs
Global coffee giant attempts to ward off backlash over accounting methodsPaid just 8.6m corporation tax in 14 years, despite 3bn in sales
Firm has 'met with taxman to discuss paying more'
Starbucks has only posted a profit from UK business once in 15 years
12:24 GMT, 2 December 2012
Coffee giant Starbucks has bowed to mounting pressure and will start paying tax in the UK.
The company, which has paid just 8.6million in corporation tax in the UK over 14 years – and none in the last three – is seeking to deflect a consumer boycott and increased taxman scrutiny by voluntarily increasing the amount it pays.
The move comes amid a storm of anger surrounding the low levels of UK tax paid by Google, Amazon and other major international corporations.
Starbucks has been trading well but pays little in UK tax because of legal accounting techniques
Parliament's public accounts committee will soon release a report blasting the tax avoidance schemes US multinational use.
Starbucks, which has more than 700 outlets in Britain, has met with HM Revenue & Customs officials to discuss increasing the amount of tax it pays.
Currently it pays a 'royalty fee' to a sister company in Holland for the right to use the Starbucks brand and recipe, allowing it to benefit from the country's tax regime. This legal accounting tactic helped Starbucks sidestep an estimated 5m corporation tax bill last year.
A spokeswoman said: 'Starbucks is committed to the UK for the long term and we have invested more than 200m in our UK business over the past 12 years. Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked.
'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.
'As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with The Treasury. We will release more details later in the week.'
Paid handsomely: UK director John Culver (left) was paid 3.8million over two years and owns 4.7million in shares, while Ex UK boss Cliff Burrows (right) now oversees the firm's Americas operation and has shares worth 7.2million.
George Osborne will announce extra investment to crack down on tax avoidance by global companies with British operations, he said today.
The Chancellor plans to bolster the Inland Revenue team that deals with multinationals amid widespread condemnation of big-name firms like Starbucks, Google and Amazon after it emerged they pay little or no corporation tax in the UK.
Mr Osborne told BBC 1's Andrew Marr Show: 'I think you can do two things. One is you can enforce the taxes we have got and I am going to be announcing tomorrow extra investment in the part of the Inland Revenue that tackles tax avoidance by multinational companies.
'Second, you make sure internationally we have the right rules and it is actually Britain who has been working with Germany and France to get those rules on the international table.
'It will be a big priority for the G7, G8, which we host next year.
'So we are doing those things but let me just say we can't tackle this by pricing Britain out of the world economy.
'If we make our taxes less competitive that will just mean more companies stay out of Britain.'
Last month it emerged that Starbucks has been able to pay handsome wages to its most senior staff over the past three years.
It was reported that finance chief Troy Alstead, who owns 6.8million of shares, was paid 5.7million, and founder Howard Schultz 33million – he also owns shares, worth 545million.
Ex-UK boss Cliff Burrows who now oversees the firm’s Americas operation and has shares worth 7.2million, earned 6.5million. UK director John Culver was paid 3.8million over two years and owns 4.7million in shares.
Bosses of Google, Amazon and Starbucks were recently grilled by MPs over how they managed to pay little or no corporation tax on their UK operations. All three denied they were engaged in aggressive tax avoidance.
Howard Schultz (left) was paid 33million on top of the 545million worth of shares he already has. Finance chief Troy Alstead (right), who owns 6.8million of shares, was paid 5.7million
At the time, a Starbucks spokesman said: ‘Corporation tax is a tax on profits and although we would very much like to and are moving in the right direction, we just don’t make a profit in the UK yet.
‘Starbucks does however pay a number of
other taxes in the UK. For example, we directly contribute more than
25million to 30million per year to the Exchequer in various taxes,
including employers’ National Insurance contributions and business