UK targets 'loss-making' Starbucks over tax bill
Published 03/12/2012 | 05:00
COFFEE giant Starbucks has begun talks with tax authorities in the UK over its controversial low tax bill there, after some British politicians called for a boycott of the chain.
Ireland company accounts show that Starbucks paid less than €40,000 in Irish corporation tax between 2007 and 2011, despite sending home millions to its US parent company in royalty and other payments.
The controversy brewed up when a Reuters investigation back in October found that Starbucks had reported 13 years of losses at its UK unit, even as it told investors the operation was profitable and among the best performing of its overseas markets.
The losses allowed the US giant's UK unit to pay no corporation tax in the last three years for which figures are available.
The UK revelations led to calls for a boycott of the store and protests at its branches, and the company's chief financial officer Troy Alstead was called to give evidence to a parliamentary committee.
Starbucks said yesterday it has always complied with British tax laws. It blamed its low tax bill on a tough operating environment.
However, a spokeswoman added in an emailed statement that the public mood had caused the company to reconsider its tax arrangements, which include intercompany royalty and interest payments that reduce the UK unit's taxable profit.
"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," she said.
"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," she added.
The company, the largest coffee chain in the world, with a market value of $39bn (€30bn), said it would release more details later this week.
The Public Accounts Committee, which grilled Mr Alstead and managers from Google and Amazon over their tax planning, is due to release its report on corporate taxation in the UK today. (Additional reporting Reuters)