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Tax pledge amid Starbucks talks

The Chancellor's pledge to make global firms pay their "proper share of taxes" comes amid speculation that coffee giant Starbucks has agreed a deal to increase its UK tax bill.

Starbucks is understood to be in talks with HM Revenue & Customs over an agreement that could see it pay around 10 million in corporation tax this financial year.

The deal would ensure Starbucks paid a level comparable to British rival Costa Coffee, according to Sky News.

The move would help calm mounting public anger after it was disclosed that Starbucks and a number of big-name overseas firms pay little or no corporation tax in the UK, including Google and Amazon.

The US coffee firm - valued at 25 billion - has generated more than 3 billion of sales in the UK since 1998, but it emerged in October it has paid less than 1% in corporation tax.

In Wednesday's Autumn Statement, Mr Osborne said: "The vast majority of people, rich or otherwise, pay their taxes and make their contribution.

"But there are still too many who illegally evade their taxes, or use aggressive tax avoidance in order not to pay their fair share."

Costa Coffee paid around 15 million in UK tax in the 2010-11 tax year and it is expected to have paid 18 million in the following financial year.

Starbucks is expected to make a statement by the end of the week.

Mr Osborne added: "We want the most competitive corporate tax system of any major economy in the world, but we expect those corporate taxes to be paid.

"So today we are confirming that we will put more resources into ensuring multinational companies pay their proper share of taxes."

On Monday, Mr Osborne announced a 154 million blitz on tax avoidance and evasion, with HMRC hiring another 2,500 tax inspectors to target high earners who aggressively avoid or evade paying tax.

The money will also fund extra staff to speed up work challenging multinationals' transfer pricing arrangements to stop global companies using legal loopholes to shift profits out of the UK.

Mr Osborne confirmed that a recently signed treaty with Switzerland will come into effect next year and see money flow from bank accounts in the country to the UK for the first time in Britain's history.

The deal will see the UK receive 5 billion over the next six years by reclaiming tax on money hidden in Swiss bank accounts.

Under the treaty, Swiss banks will impose a "withholding tax" on UK resident client assets and then transfer that money to Britain's HMRC.

Britain's first general anti-abuse rule will also come into effect next year, while Mr Osborne said plans are being drawn up to put reform of international rules around corporation tax at the top of the agenda during Britain's chairmanship of the G7/8 next year.

Treasury officials are also working on plans to replicate an information exchange agreement between Britain and the United States with other countries to stop international borders being exploited to avoid tax.

The crackdown is expected to reap an extra 2bn annually in unpaid tax for the Treasury.

Mr Osborne said this will come on top of the additional 7 billion that it has recovered in taxes compared with the previous government and added prosecutions for tax evasion were already up 80%.

But the British Chambers of Commerce (BCC) warned the Government not to "chase away" major companies from Britain.

John Longworth, director general of the BCC, said: "There is real and justifiable anger amongst many small and medium-sized businesses when they hear about aggressive tax avoidance schemes used by some of the biggest companies operating in the UK. That anger is growing, and must be addressed.

"However, there is a fine line to tread here. It would be naive and self-defeating for Britain's political and media class to chase away major companies that generate jobs and investment."

Starbucks declined to comment on the tax deal, but confirmed talks with the Government.

It said: "The company has been in discussion with HMRC for some time and is also in talks with the Treasury regarding its tax approach in the UK.

"Further details will be released later this week."

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