Starbucks in talks on paying more tax in UK

Mon, Dec 3, 2012, 00:00

Multinational coffee giant Starbucks is in talks to pay more corporation tax in the United Kingdom following bitter attacks by MPs, complaints by customers and falling sales.

The declaration comes as the House of Commons public accounts committee issues a report today sharply condemning tax avoidance by multinationals.

“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,” said Starbucks.

Despite sales of £1.3 billion in the UK over the last three years, Starbucks has paid no corporation tax, while it has paid just £8.6 million in its 14 years of trading.

The Starbucks move will increase pressure on Google – which reduces its UK tax bill by diverting advertising revenues through an Irish subsidiary – to pay more tax to the treasury.

Chancellor of the exchequer George Osborne will today announce extra funding for Revenue and Customs to combat tax avoidance by multinational firms operating in the UK.

Meanwhile, the chancellor is press ahead with efforts involving France and Germany to toughen rules for multinationals, which could affect Ireland’s attractiveness to those firms.

Starbucks cuts its UK tax exposure by paying premium fees for coffee beans bought through a Swiss subsidiary, along with 4.7 per cent levy to one in the Netherlands for roasting and licensing fees.

Calling for “a change in mind-set” from British tax officials, the committee’s report accuses them of displaying “a pervasive acceptance of the status quo”.

In particular, the report condemns transfer-pricing rules, where multinationals move revenue to lower tax jurisdictions, such as Ireland.

However, the chancellor has warned that his room for manoeuvre on tax rates is not limitless.