Starbucks pays £5m corporation tax to UK

Starbucks pledged �20m in tax after campaigners urged customers to boycott its shops. Picture: Getty
Starbucks pledged �20m in tax after campaigners urged customers to boycott its shops. Picture: Getty
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TAX campaigners have called on Starbucks to “repay its debt” to the UK in full after the global coffee giant revealed it had made its first corporation tax payment to UK authorities in five years – of £5 million.

Starbucks – which along with Amazon, Google and Vodafone, has come under attack in recent months for its minimal UK tax payments – said yesterday that it committed to pay £20m in corporation tax over two years, with the first £5m already paid out to the Exchequer.

The firm, which has more than 750 outlets in the UK, told MPs last year it had made a loss for 14 of the 15 years it has operated in the UK, achieving just a small profit in 2006.

Its last set of annual accounts show Starbucks’ European arm made a loss of £39m in 2012.

But campaigners, who have long spoken out against the small UK tax payments made by worldwide corporations, argued that the US firm should compensate for its lack of corporation tax payments throughout its entire time in the UK.

Starbucks has reportedly paid just £8.6m in corporation tax in the UK over 14 years. An investigation published last year showed nothing had been paid in the past four years – despite sales of £400m last year.

Len McCluskey, Unite union’s general secretary, said: “That they had to be embarrassed and hounded into paying some of the tax they owe this country reflects badly on Starbucks but brilliantly on the fair tax campaigners who chase down these cheats. We commend their efforts today.

“People won’t be bought off easily though – Starbucks must settle its debt to the UK in full.”

He added: “Now it is back to the Treasury. Put the people and resources into collecting the tax companies like Starbucks go to great lengths to avoid paying. That would be a far greater service to the nation than expecting ordinary people to pay down the deficit they did not create through cuts and attacks on living standards.”

In a fiery showdown with the Commons’ public accounts committee last year, Starbucks insisted it was “an extremely high taxpayer” globally and acted “to an ethical” as well as a legal standard, despite declaring losses on its UK operation.

The company said yesterday that it had bowed to public pressure to pay more corporation tax after tax avoidance campaigners late last year urged the public to boycott the chain.

“We listened to our customers in December and so decided to forego certain deductions, which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014,” said a Starbucks spokeswoman.

“We have paid £5m and will pay the remaining £5m later this year. We are also undertaking measures to make Starbucks profitable in the UK, such as relocating unprofitable stores…, closing them where that is not possible and placing greater reliance on franchised stores.”

Speaking to MPs last year, global chief financial officer Troy Alstead blamed an aggressive entry to the UK market, which had left it with expensive properties that did not make money.

He claimed: “We have a global tax rate of 33 per cent around the world. Our tax rate outside the US is 21 per cent. That is higher than most multinationals’ global rate. We are an extremely high tax payer.”