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Starbucks pays UK tax for the first time in five years

Press Release   •   Jun 24, 2013 11:14 BST

Starbucks has finally bowed to political pressure, making its first corporation tax payment to the Treasury since 2008, even though it still doesn't make any profits.

The announcement comes after leaders of the G8 major economies last week struck a deal to fight corporate tax avoidance, which while not illegal, robs government coffers of sizeable income at a time of deep cuts to public spending.

A company spokeswoman said it had listened to its customers and would pay another £5m later this year.

The chain, one of a number of household names to face bruising attacks from MPs late last year after it emerged they paid little tax in the UK, caved into pressure in December and agreed to hand over £20m to HM Revenue & Customs by the end of 2014.

Starbucks' UK subsidiary has not posted a profit for five years, meaning it is not liable to pay corporation tax, but the company has been singled out for its accounting practices, even though they are little different to those of many other multinationals.

Starbucks has insisted its UK business has consistently made a loss because of high rental costs. While the chain expects to make a loss this year too, it said in a statement that it "felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax."

Starbucks reportedly paid just £8.6m in corporation tax in the UK over 14 years and nothing in the last four years - despite sales of £400m last year.

As part of its tax affairs, the firm transferred some money to a Dutch sister company in royalty payments, bought coffee beans from Switzerland and paid high interest rates to borrow from other parts of the business.

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