Starbucks Offers to Pay More British Tax Than Required

“Having listened to customers and to the British public, Starbucks in the U.K. will be making changes which will result in the company paying higher corporation tax in the U.K. — above what is currently required by law,” the company said in a statement.

Starbucks said that in 2013 and 2014 it would refrain from claiming certain tax deductions that helped reduce its tax bill in Britain to nothing over the past three years. The company said it would pay taxes over the next two years even if it does not post a profit in Britain, where it has more than 700 shops.

The tax practices of Starbucks, along with those of other U.S. multinational companies, including Google and Amazon, have come under intense scrutiny in Britain in recent weeks, even as the government has announced plans to extend its fiscal discipline for another year.

The chairman of the Public Accounts Committee of Parliament, Margaret Hodge, has accused the companies of “immoral” behavior and protesters have called for a boycott of Starbucks.

U.K. Uncut, a group that is campaigning against the government’s fiscal policies, has called for protests outside Starbucks stores on Saturday. The group dismissed the latest announcement from the company as a ploy.

“Offering to pay some tax if and when it suits you doesn’t stop you being a tax dodger,” Hannah Pearce, a spokeswoman for U.K. Uncut, said in a statement. “Starbucks have been avoiding tax for over a decade and continue to deny that it paid too little tax in the past. Today’s announcement is just a desperate attempt to deflect public pressure.”

In its 14 years of doing business in Britain, Starbucks has paid a total of £8.6 million, or $13.8 million, in corporate taxes there. The company has reduced its tax bill in Britain by channeling revenue through other company subsidiaries in jurisdictions where tax rates are lower. One unit in the Netherlands, for example, receives royalty payments from Britain.

Similar tax-reduction strategies are employed by many multinational companies. But Starbucks said that it would not make such transfers over the next two years.

“Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges,” the company said.

Article source: http://www.nytimes.com/2012/12/07/business/global/07iht-uktax07.html?partner=rss&emc=rss