Financial News
- 18 October 2012, 11:35
Starbucks Boss: 'We Pay Our Fair Share Of Tax'
The managing director of Starbucks UK has defended his company's tax arrangements which have seen it pay no corporation tax for the last three years.
Kris Engskov told Sky News the company had no plans to change its arrangements despite sales of £1.2bn in the UK.
He also insisted HM Revenue and Customs (HMRC) was happy with the amount of tax the coffee giant pays and is not investigating its accounts.
He said: "This idea, this suggestion that we don't pay tax in the UK is simply not true.
"Over the last three years we have paid over £160m in VAT, rates and national insurance.
"We don't maybe not pay as much as other companies have paid in corporate tax over the last few years.
"But I got to tell you, and it pains me to admit this at times, but we haven't done as well in the UK as we had hoped to over the last three years.
"We know that corporate taxes are directly related to profitability and it may seem like in the news this is all related to some big sophisticated tax structure but at the end of the day it's about local performance."
He added that Starbucks had only made a profit in the UK once in the 14 years it has been trading in the country.
In comparison, McDonald's paid a tax bill of more than £80m on £3.6bn of UK sales, while KFC incurred taxes of £36m on sales worth £1.1bn.
Starbucks, which has a market capitalisation of $40bn (£24.8bn), has a low UK tax rate because of a number of complicated corporate measures.
For example, its overseas operations have to pay a royalty fee - 6% of total sales - for the use of its "intellectual property", including its brand and business processes.
It also buys its coffee beans for its European divisions through a firm based in Lausanne in Switzerland, and the beans are shipped to Amsterdam to be roasted before they reach the UK.
what do you think?
Ben Ralph
He truly thinks we are all idiots. Boycott Starbucks, it's the only thing he will understand.
Windows Live User
Already done. I dont think they will realise profits of £1.2bn in the UK in the future, unless they stop moving money around and cough up decent wedge into the UK coffers.
Stuart Harley
.HAVE S/B DONE ANYTHING ILLEGAL = NO ......... WHO LIKES AND WANTS TO PAY MORE TAX, ANYBODY VOLENTEERING ?????????
Windows Live User
I think Kris Engskov has misread the warnings signs and the mood of the nation. His explanation is really feeble. It is not vat we are interested in. Corporation taxes of low levels due to exploiting loopholes in the tax system is the concern at this time. The same goes for all the rest of the slippery large companies we have in the UK If a "fair" corporation tax was paid each year then we would not have a deficit laid on the shoulders of the small individual. Shareholders should be pushing for a fair payment to take place each year.
Ged Sanderson
Buying the coffee beens via an agent in Switzerland and having them roasted in Holland is a decision taken only to avoid paying UK Corp Tax. Those facilities are available in UK. Any right thinking person would stop trading in a country if there is no profit in it. But nothing will be done about it because our tax system being so complex and there is no one in the UK with the brains or the will to fix it. But I am sure if the larger companies can find clever accountants to exploit the system and help kill this country economically then perhaps HMRC should employ those accountants to fix the system in the fairest way so as big businessand HMRC get an equitable share of the profits.
Chris Robinson
10:25pm on 17/10/2012
Yeah, right.