Starbucks agrees to pay corporate tax to UK after evading payments
US-based coffee giant Starbucks said Thursday that it will pay around £10 million in corporation tax in Britain in each of the next two years after lawmakers roasted the company for avoiding taxes.
Kris Engskov, the managing director of Starbucks UK, made the announcement in a speech in London amid rising public anger in austerity-hit Britain at multinationals that fail to pay enough tax.
“Today, I am announcing changes which will result in Starbucks paying higher corporation tax in the UK — above what is currently required by law,” Engskov said in the speech to the London Chamber of Commerce.
He said that in 2013 and 2014 Starbucks would not claim tax deductions for “royalties or payments related to our intercompany charges”.
“In addition, we are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years,” Engskov said.
“We are still working through some of the calculations, but we believe we could pay or prepay somewhere in the range of £10 million ($16.1 million, 12.2 million euros) in each of the next two years in addition to the variety of taxes we already pay.”
Starbucks had previously confirmed that it did not pay any corporation taxes in Britain for the past three years on sales worth £400 million.
It was able to do so by paying fees to other areas of its business — such as “royalty payments” for the use of the brand — which resulted in the company posting a series of losses and not having to pay any corporation tax.
British finance minister George Osborne on Monday announced a campaign against “tax dodgers” and “cowboy advisers” worth £2 billion.
Also on Monday a parliamentary committee alleged that multinationals such as Starbucks, US online retailer Amazon and Internet search giant Google were involved in the “immoral” avoidance of tax.
Margaret Hodge, who chairs the committee, said: “Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here.
“This is outrageous and an insult to British businesses and individuals who pay their fair share.”