Starbucks Tax Backlash: Firm Pledges Action
Starbucks has announced it is reviewing its tax affairs after a public backlash over the low amount of tax the US company pays in the UK.
The Seattle-based company reportedly paid just £8.6m in corporation tax in 14 years of trading in Britain.
It recently revealed it paid no corporation tax for the past three years, despite sales of £1.2bn in the UK.
Now, the coffee chain has revealed it is in talks with Her Majesty's Revenue and Customs (HMRC) and the Treasury over its tax affairs as part of a bid to "build public trust".
"Starbucks is committed to the UK for the long term and we have invested more than £200m in our UK business over the past 12 years," the statement said.
"Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked.
"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.
"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."
The firm is one of many multinationals to have the amount of tax they pay in the UK put under the spotlight.
Chancellor George Osborne is set to address the issue in his Autumn Statement on December 5.
On Sunday Mr Osborne announced extra investment to help clamp down on the multinational companies' tax avoidance.
Last month, the Commons Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, questioned senior executives from Starbucks, Google and Amazon on why they pay so little tax in the UK while racking up millions of pounds' worth of sales.
"I assure you we are not making money," Troy Alstead, the chief financial officer of Starbucks, told the committee.
"It's very unfortunate. We're not at all pleased about our financial performance here. It's fundamentally true everything we are saying and everything we have said historically."
His comments came despite operating more than 700 UK stores and employing nearly 8,500 people, along with plans to employ another 6,000 staff and open 300 outlets.
Companies are able to sidestep the taxman legally by conducting different operations in different countries, and constructing complex global frameworks that allow them to move money through offshore subsidiaries and locations.
what do you think?
Invested £200 million for a £1.2 billion turnover and return of ?????????????? are we expected to be greatful that they syphon all profits out of the country to avoid tax
Windows Live User
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The best fairy tale of the year... Starbucks not making a profit in the UK?????? Yeah!!!!
Are we going to get the back tax owed, all that money Starbucks took out of the country..
If I was running a company that didnt make a profit for anywhere between 3 & 12 years I think I would have shut it down by now!!!
Maybe they will and then we can add 5000 more to the dole
Probably wont blueside because they send back at least £96m per year to the head office in 'fees'! So not really going to kill the fatted cow now are they!
Sorry folks but we might get a shock and find things are as stated but then that would not suit the Government hype
we should all avoid starbucks and give our custom to uk companies instead
Windows Live User
done that already and staying with them
Clever that so we then make another 5000 unemployed - good thinking
It is clever because when a uk company gets boosted sales it might decide to expand and create more jobs!?
blueside, if you had a brain you would realise that lilke rob said, if the vacuum left by the foreign companies was filled by uk companies then they would grow bigger and employ the people who used to work the forign companies. also all of the money would remain within the uk economy.
After investing 200million quid, I'd rather admit tax evasion than the fact I'd made no profit. That sounds like business stupidity and frankly barely believeable. They need to pay up.
Windows Live User
Didnt Capone go to jail for tax evasion? Isnt that a nice person to be associated with?
THIS IS NOT TAX EVASION BUT TAX AVOIDANCE and they are different animals
Sorry - my bad. You know what I mean!
Windows Live User
Remember it was PUBLIC BACKLASH, after a report by the press. Not some politician who did good They will only "build public trust" when they really come clean and hand over the shekels. Not more fairy tales or hard done by stories. Obama should be giving them a boot up the back side.. USA Corporate Governance is not worth a penny
Sorry Shirley but it is clear how many people on this blog have experience within major business. I agree we need to do something so lets lower the corporation tax level making Britain the place and then with an increase in business we get more employment and thus tax revenue. We are being hoodwinked by this tax thing taking away the real issue.
Shirley? Shirley you can't be serious? :)
Without the freedom of the PRESS (for all its faults) we would not have an inkling about this story nor would we know about the thieving M.P.who thought all us tax payers should contribute to his Duck House. We do not need a law to stop free press
Wrong blog, foster!!!!
Need to do something as British companies can't compete on a level playing field with likes of Starbucks etc - let's see how much guts this governments got and closes the loop holes
Shirley yes we need to do something like lowering corporation tax - just think this through. Lower corp tax then no need for tax avoidance + attracts more FDI = increased employment = increased tax income. Take your method makes companies look to other jurisdictions so they pull out and up goes unemployment.
Sorry blue, but the point of capitalist businesses is to make as much profit as possible, so if big companies like these can get away with paying little or nothing, they're going to. All that will happen with your plan is that when they're caught, it won't seem like such a big deal because they won't be underpaying by as much.
If they don't pay tax here, then don't allow them to operate here, and sequester their assets for back-taxes at the same time as you kick them out! I'm sure there would be many ex-Starbucks employees who would be more than willing to operate the outlet they worked in as an independent purveyor of coffee. Politicians really do need to grow some gonads!
Good also we might see unemployment rise by around 5000 - ever thought about that scenario?
There are a lot of UK Based international companies that do not pay tax in other countries, but pay in the UK Would you ban them from operating in other countries ?
Blue side dont see unemployment rising if starbucks close someone else will fill the demand
Don't see why anyone wants to drink that slop anyway. Get down t'pub.
Definitely with you there!
It really is a kick in the teeth when so many high street and small businesses suffering because of the economy and Starbucks getting this tax loophole.
Private companies are renowned for operating on a non-profit basis. If this jackass thinks we will swallow this hogwash he is obviously as dumb as he thinks we are. If his company wasn't making a substantial profit it wouldn't be here.
Keep the money in Britton yeh
Britton?! - you've been watching too much of Fern - or was it a Freudian slip John?
Fastbucks Coffee for that lingering Bad taste in the mouth .