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Starbucks pays corporation tax in UK for first time in five years | Starbucks pays corporation tax in UK for first time in five years |
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Starbucks has paid corporation tax in the UK for the first time since 2008, the company has announced. | |
The coffee chain told MPs last year that it made a loss for 14 of its first 15 years in the UK, achieving just a small profit in 2006. | |
But under pressure from politicians and the public, it committed to pay £20m in corporation tax over two years, and the exchequer has now received the first £5m. | |
A Starbucks spokeswoman said: "Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax. | A Starbucks spokeswoman said: "Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax. |
"We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014. We have now 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 to more cost-effective locations, closing them where that is not possible and placing greater reliance on franchised and licensed stores." | |
In a fiery showdown with the Commons' public accounts committee last year, Starbucks said 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. | |
Its global chief financial officer, Troy Alstead, blamed an over-aggressive entry to the UK market which had left it with expensive properties that did not make money. | Its global chief financial officer, Troy Alstead, blamed an over-aggressive entry to the UK market which had left it with expensive properties that did not make money. |
"It is fundamentally true, everything we are saying and everything we have said historically," he told the committee, and said the firm remained committed to making profits here. | |
He conceded that a tax deal struck with the Dutch authorities – which he declined to detail – was "an attractive reason" for basing the coffee company's operations there. | |
A chunk of UK branch profits – 6%, reduced to 4.7% in what one MP called a "cosmetic" deal with HMRC – is transferred there as a dividend, meaning there is no profit to declare. | |
It also charges a 20% markup on coffee, which it buys via Switzerland where it pays 12% tax. | |
"Respectfully, I can assure you there is no tax avoidance here," Alstead told MPs. "We have a global tax rate of 33% around the world. Our tax rate outside the US is 21%. That is higher than most multinationals' global rate. We are an extremely high taxpayer." | |
He added: "We do not manipulate anything, anywhere." | He added: "We do not manipulate anything, anywhere." |