Starbucks: No UK Tax Paid Since 2009
Since opening its first coffee shop in the UK in 1998, Starbucks has racked up over £3bn in sales but shelled out just £8.6m in income taxes, according to new research.
In the latest example of tax avoidance by a multinational company, Reuters revealed that for the past three years the coffee chain reported a loss at its UK business.
As a result it paid no income tax in Britain - but over the same period, its sales hit £1.2bn.
By comparison, McDonald's paid a tax bill of over £80m on £3.6bn of UK sales, and KFC incurred taxes of £36m on sales worth £1.1bn.
There is no suggestion Starbucks has done anything illegal - according to accounts filed with Companies House, Starbucks has made no profit in the UK over the past 10 years.
But transcripts of investor and analyst calls over the period reveal the company has repeatedly said it is pleased with its UK business, which it described as "profitable".
The coffee chain has defended its actions, saying it pays the appropriate level of tax.
"Starbucks is totally committed to the UK, which continues to be one of our most important markets," a spokesperson said.
"We will continue to pay our fair share of taxes to the letter of the law in the UK as we always have.
"This is in keeping with our values as a business, holding ourselves to the highest ethical standards, be it in the way we source our coffee or pay our taxes."
Its overall tax rate globally last year was much higher than average at 31%.
But on overseas income, Starbucks paid an average tax rate of 13% - one of the lowest in the consumer goods sector.
The chief executive of the TaxPayers' Alliance, Matthew Sinclair, said companies exploit loopholes because the UK's tax system is too complicated.
He told Sky News: "There has been a succession of companies from high street names to internet giants who, thanks to the labyrinth of our tax system, appear to be paying much less in tax than many people would expect."
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.
As a result, Starbucks allocates some profits from its UK sales to these Dutch roasting and Swiss trading units.
Mr Sinclair called for a radical overhaul of Britain's tax system to make it simpler.
"Tinkering is not enough; we have one of the most complicated tax codes in the world which is an incredible burden to administer," he said.
"If Britain wants to remain competitive and ensure everyone pays their fair share then we need radical reform that restores legitimacy to our tax code and kick starts economic growth."
HM Revenue and Customs said it cannot comment on the tax affairs of individual businesses.
"We make sure that multinationals pay the right tax to the UK in accordance with UK tax law," it said in a statement.
"Our tax rules combat tax avoidance, and we employ specialist tax professionals to ensure that MNs play by the rules."
what do you think?
It's about time sell this tax dodging by big business in this country is sorted out .If they don't want to pay don't let them trade Some will bang on about job loses but do you really think that the millions they would still make even after tax that they would pull out No there's still lots of profit in it for them
Windows Live User
Kick them out of the country If these robber companies didnt exist we wouldnt have a deficit
illegalised fraud whydo they still get away with it !!! goverment got no backbone tax man get your finger out
Capitalism in action
yep - it works and it's great and pays the benefits of the wasters in this country
I pity you mick
And who are the scroungers?
Simple. Boycott Starbucks. There are plenty of other independent Coffee places. Stop paying for a logo and support companies based in Britain who pay appropriate tax not the bare minimum.
Windows Live User
had my last cup mate Hope millions join in your call
there are dozens if not hundreds of (foreign owned of course) firms alowed to get away with defrauding hmrc BECAUSE ...... the limp wristed fraudsters in west minster know they will relocate abroad ..... THUS you have the main reason why britain is dead ................ ALL THE PROFITS HAVE BEEN ALLOWED TO GO ABRAOD FOR DECADES ..... leaving just you and me folks to pay the bills
Windows Live User
They know Britain is too good for business so will never leave. Time the tax dept was sorted out and some big collectors hired
...SO STARBUCKS HAVE DONE NOTHING WRONG........(except employ a lot of people )
Yes and I bet all those low paid workers pay their fair share of income tax. They probably have to claim working tax credits as well. In essence the tax payer is susidising Starbucks.
Stuart - 100% correct. At last somebody with intelligence.
Apart from being immoral
Of course, companies like Starbucks, Vodafone, AOL (UK) not paying a proportionate amount of tax ultimately affects how services in this country run. Imagine if every working person had the opportunity to pay less than 1% tax. What happens to the country then? That's why it is wrong.
Windows Live User
At last someone with real sense. Well said Ben
the brave government would sequestrate their finances until they pay up ............... or better still do it and renationalise them and pay them just a £1 for the privledge
Why would anyone want to drink this swill anyway? Get down t' pub!
As another American crook once stated, "Only the little people pay taxes". Are any members of parliament "advisors" to this shower?
Great lets hit the likes of Starbucks and McDonalds and make as many people as possible unemployed when they stick two fingers up at the UK. No doubt a Labour party policy!! THESE COMPANIES HAVE DONE NOTHING WRONG!!!!
Windows Live User
They wouldnt go anyway. Britain is too good for business. Taxman needs to grow a pair, as do some other depts
Can't believe it why has'nt the government done nowt
because they are probably "advising" these firms how to do it !
I've got a question for all the capitalists who defend multimillion corporations. . . If you saw money sticking out of fresh dog faeces what is the minimum denomination it would need to be before you put it in your pocket? Answers below please, if your not too busy worshipping Mammon
The problem here is that Starbucks have done nothing illegal. They are using the loopholes in our ludicrously complex tax system. Is it morally wrong what they are doing, yes, is it legally wrong, no. Many of our own UK companies do exactly the same things & I haven't even got started about offshore banking in the likes of Guernsey & Jersey, etc. Simpler tax laws are desperately required & have been for years but I probably won't see it in my lifetime!
if so why was jimmy carr so nastily targetted by the media ??
Jimmy Carr had actually done nothing illegal, it was within our tax laws. I haven't a clue why he was targeted, perhaps he had upset someone in high places. To single him out was a bad joke, there are thousands of individuals & British companies with offshore accounts, fact. Jimmy or his accountants merely took advantage of the current tax laws.
because the media are slime?
Windows Live User
I agree, but neither have they done anything righteous out of respect to this country and it's people.
So we are expected to believe that a hard-nosed US corporation has kept it's loss making British operation going out of the kindness of it's heart! If you believe that then you probably believe in the fairies at the bottom of your garden. Shouldn't the police be investigating the top brass at the Inland Revenue and the recent claims that it's head is the most wined and dined man in the City?
it is NO CO -INCIDENCE that the laws of this land are created and persued by the legal fraternity is it ??
Hmmmm, a financial expert speaking on LBC a few moments ago said that Starbucks recently told it's investors that it's UK operation is one of their most profitable concerns, also that by diverting the British profits to it's Swiss arm, then it can inform the Inland Revenue that is did not make a profit, if Joe Bloggs did this, then Joe Bloggs would have had his collar felt by the long arm of the law, something stinks to high heaven here.
to be honest they're only using loopholes in the system that the gonvernments have allowed to remain. If they actually sorted out the tax system to remove these loopholes then it would be simple to prosecute companies (and the governments rich pals!) for tax avoidance. At the moment they're just applying the letter of the law. Not their fault - it's HM gov for letting it be possible!
31 percent is an unnacceptable level of tax for any business to be paying. It has the opposite effect of improving the global economy. Why should business ventures not attempt to penalise governments who charge them extortionate amounts of tax? Governments penalise everyone else.