Starbucks dodges "Trenta" sized UK tax bill

[Brazen]

Starbucks 'paid just £8.6m UK tax in 14 years'

US coffee giant Starbucks reportedly paid just £8.6m in corporation tax in the UK over 14 years.

The four-month investigation by news agency Reuters also found the firm had paid nothing in the last three years.

It found Starbucks had generated over £3bn in UK sales since 1998 but had paid less than 1% in corporation tax.

"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," Starbucks said.

"There has been no suggestion by any authority that we are anything but compliant and good tax payers.

"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."

But campaigner Richard Murphy from Tax Research UK, who was consulted by the Reuters team as part of its investigation, said: "Starbucks are playing the game here. This is tax avoidance, they're doing nothing illegal. That doesn't mean to say it's right, in my opinion," he told BBC Radio 5 live.

He said it showed that the current rules on tax did not work and it was up to politicians to put it right.

"When we have a tax system that lets very large companies like Starbucks be on our High Street and pay no tax and are competing with small locally owned businesses who are paying tax on all their profits, then there's something very clearly wrong with our tax system."

Asked about Starbucks' tax bills, the prime minister's spokeswoman said the government would not comment on any specific case.
'Extremely unfair'

According to the Reuters investigation, Starbucks generated £398m in UK sales last year but paid no corporation tax.

In comparison, rival Costa recorded sales of £377m in the UK last year, and paid £15m in tax, or 31% of its profits.

Starbucks is not alone though, in facing criticism for its low tax bill.

Last week Facebook was criticised for paying just £238,000 in tax last year in the UK despite estimates of making £175m in sales, while earlier this year Google was also criticised for paying just £6m tax on UK revenues of £395m.

In April, a report in the Guardian said that online retailer Amazon had generated sales of more than £7.6bn in the UK over the past three years but had not paid any corporation tax on the profits from those sales.

Labour MP and tax campaigner Michael Meacher said Starbucks' practice was "profoundly against the interests of the countries where they operate and is extremely unfair".

"They are trying to play the taxman, game him. It is disgraceful," he said.

A spokesman for HMRC said: "For legal reasons, we cannot comment on the tax affairs of individual businesses, but we make sure that multinationals pay the right tax to the UK in accordance with UK tax law."

Tax expert John Whiting from the Chartered Institute of Taxation said the HMRC monitored big companies carefully and the government would be looking to close any genuine loopholes. But in terms of tax revenue, he told the BBC it was important to look at the bigger picture.

"In may ways corporation tax is a bit of a bonus - the company should be paying it if it is making profits," he said.

"But in many ways the biggest contribution it makes is in creating employment - [which generates] PAYE, National Insurance, paying business rates, VAT.

"The company may not be paying much corporation tax but the country will still be making a good profit out of them."

Starbucks said it was committed to the UK and pointed out that it plans to create 5,000 new jobs over the next five years.

I shopped them because they couldn't spell my name right even when I spelled it out 

[garbon]

I shopped them because they couldn't spell my name right even when I spelled it out 

Doesn't that say more about the British?

[Brazen]

Doesn't that say more about the British?

Since when have any British people worked in the UK service industry?

[Grey Fox]

And yet a good number of people still advocate for less tax.

[garbon]

Doesn't that say more about the British?

Since when have any British people worked in the UK service industry?

They speak with British accents so that's all I needed.

[Gups]

What a terrible article. Why does it compare corp tax paid against sales when it is payable on profits? Why doesn't it explain why Starbucks and others are avoiding paying corporation tax? 

[Eddie Teach]

Yeah, I mean it's possible to have revenue of 3 billion and still be operating at a loss.

[garbon]

Why doesn't it explain why Starbucks and others are avoiding paying corporation tax? 

Well a different article gives some suggestions:

http://www.independent.co.uk/news/business/news/good-bean-counters-starbucks-has-paid-no-tax-in-uk-since-2009-8212579.html

According to an investigation by Reuters, the anomaly can be explained by the use of legal accounting techniques which leave the coffee company paying HMRC proportionately less tax than other firms such as McDonald's and KFC.

The disclosure, which brought immediate condemnation from tax campaigners, follows criticism of the tax record of two other large American corporations, Amazon and Facebook.

In April, Amazon was revealed to be routing its UK sales through its European headquarters in low-tax Luxembourg, meaning that last year its UK corporation tax bill was nil, despite revenue of £3bn from the sale of books, DVDs and other goods.

Most of Facebook's UK income is thought to be routed through its European HQ in the Republic of Ireland, where corporation tax is lower. It paid tax of £238,000 on £20.4m sales last year, although one estimate puts its advertising revenue at £275m.

[MadImmortalMan]

I didn't realize Luxembourg was low-tax.  Huh.

[dps]

I don't really understand why companies (or individuals, for that matter) should be criticized for do things that legally lower their tax bills.  If it's unfair, but legal, then it's the tax laws that need to change, not the companies' accounting practices.

After all, it's hardly like the vast majority of taxpayers are voluntarily paying more than they are legally required to do.

[Martinus]

I don't really understand why companies (or individuals, for that matter) should be criticized for do things that legally lower their tax bills.  If it's unfair, but legal, then it's the tax laws that need to change, not the companies' accounting practices.

After all, it's hardly like the vast majority of taxpayers are voluntarily paying more than they are legally required to do.

Well, this is usually done by recognizing profit and paying taxes in other countries (with lower tax rates). People in countries that lose money that way have a right to be pissed off and eg react with a boycott.

[dps]

I don't really understand why companies (or individuals, for that matter) should be criticized for do things that legally lower their tax bills.  If it's unfair, but legal, then it's the tax laws that need to change, not the companies' accounting practices.

After all, it's hardly like the vast majority of taxpayers are voluntarily paying more than they are legally required to do.

Well, this is usually done by recognizing profit and paying taxes in other countries (with lower tax rates). People in countries that lose money that way have a right to be pissed off and eg react with a boycott.

Sure, but again, though, almost all those people would do the same thing in the same situation. 

[Gups]

I don't really understand why companies (or individuals, for that matter) should be criticized for do things that legally lower their tax bills.  If it's unfair, but legal, then it's the tax laws that need to change, not the companies' accounting practices.

After all, it's hardly like the vast majority of taxpayers are voluntarily paying more than they are legally required to do.

Well, this is usually done by recognizing profit and paying taxes in other countries (with lower tax rates). People in countries that lose money that way have a right to be pissed off and eg react with a boycott.

Sure, but again, though, almost all those people would do the same thing in the same situation.

Almost certainly and it is pointless in trying to make it a moral issue. But the point is that most people aren't in that situation because governments don't let them. My pay is directed at source. I have no opportunity to route it through Monaco.

[Martinus]

I don't really understand why companies (or individuals, for that matter) should be criticized for do things that legally lower their tax bills.  If it's unfair, but legal, then it's the tax laws that need to change, not the companies' accounting practices.

After all, it's hardly like the vast majority of taxpayers are voluntarily paying more than they are legally required to do.

Well, this is usually done by recognizing profit and paying taxes in other countries (with lower tax rates). People in countries that lose money that way have a right to be pissed off and eg react with a boycott.

Sure, but again, though, almost all those people would do the same thing in the same situation.

I wouldn't call it a moral issue. It's like avoiding draft (by legal means), refusing to vote in elections or avoiding jury duty - it's "immoral" only in what I would call a patriotic paradigm, which is silly to begin with, and doubly silly when it comes to international corporations. Still, people for whom patriotism is important would scoff at such behaviour.

[Josquius]

It is kind of interesting considering how starbucks usually prides itself on being different to other megacorps, giving a shitm etc...