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Date: 2020-02-17 Page is: DBtxt001.php txt00003452

Taxation
Taxation in UK

Starbucks 'paid no UK tax since 2009' US coffee chain has only paid $14m in corporation tax in UK since 1998, and nothing in past three years, probe finds.

Burgess COMMENTARY
The matter of taxation tends to be emotional and the dialog not very helpful. Much of what gets said in words and headline numbers does not move the discussion forward in a useful way.

Broadly speaking, I am of the view that economic activity thart generates high profits should pay sufficient tax so that government can function well and deliver the services that society needs.

Since time immemorial government has raised revenues from a wide variety of sources, and in this regard not much has changed.

The payment of only $14 million of corporation tax on revenues over the same period of $4.8 billion suggests that they are not paying 'a fair share' even though what they are doing may be perfectly legal. Is this, however, the whole story? The situation may be a whole lot worse, or not bad at all. My intuition is that it is a whole lot worse, but I need to know more of the numbers to be able to draw reliable conclusions.

If the economic activity is yeilding a high pre-tax profit for the company, then I would like to see a reasonable tax flow to government. If there is no money profit, then a small tax flow to government would be in order.

Some advocates for cree enterprise corporate business argue that a company must optimize return to shareholders above all else. They ignore impact on society, employees, suppliers and customers. A sustainable society will take all these stakeholders into account.

I think it is fair to describe Starbucks as very profitable for shareholders and the executive class. Society is not in the corporate equation beyond the idea that it is a good thing to have a coffee shop in the neighborhood. Employees are not paid very well ... albeit perhaps quite well by very low service sector standards. Coffee suppliers have to do good prices or else. Customers pay high prices for quite low cost product. What landlords get may well be substantial.

What are the tax flows in all of this? It is not at all clear. How do profits compare to wages? How do profits compare to coffee purchases? How dd profits compare to payments to landlords? How do profits compare to the total of all taxes paid to all governments and agencies?

This information should be very easy to find out ... but it is not. Most of private business performance information is hidden from sight and not available for analysis ... what a company releases is quite limited, and often important information is packed via PR so that it becomes even more difficult to understand.

At some point, companies like Starbucks should be held to account in an appropriate way.
Peter Burgess

Starbucks 'paid no UK tax since 2009' US coffee chain has only paid $14m in corporation tax in UK since 1998, and nothing in past three years, probe finds.


IMAGE Starbucks said it was committed to the UK and plans to create 5,000 new jobs over the next five years [GALLO/GETTY]

Coffee giant Starbucks has reportedly only paid $14m in corporation tax in the UK since 1998, and nothing in the past three years, despite racking up sales of more than $4.8bn.

A four-month investigation by news agency Reuters found that overall the firm had paid less than one per cent in corporation tax.

The coffee chain defended its actions, saying it had paid the appropriate level of tax.

In a written response, the US company said: 'We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have.

'There has been no suggestion by any authority that we are anything but compliant and good tax payers.

'We do this in a way that is consistent with the values that have guided us since we were founded more than 40 years ago: balancing our need to operate a profitable business with a social conscience.'

Starbucks said it was committed to the UK and pointed out that it plans to create 5,000 new jobs over the next five years.

'Clearly wrong'

The group's overall tax rate, including deferred taxes which may or may not be paid in the future, was 31 per cent last year, much higher than the 18.5 percent average rate that campaign group Citizens for Tax Justice says large US corporations paid in recent years.

But on overseas income, Starbucks paid an average tax rate of 13 per cent, one of the lowest in the consumer goods sector.

Overall, the tax rate globally last year was much higher than average at 31 per cent, but on overseas income, Starbucks paid an average tax rate of 13 per cent, one of the lowest in the consumer goods sector.

Speaking to Al Jazeera, campaigner Richard Murphy, from Tax Research UK, who was consulted by the Reuters team as part of its investigation, said: 'When we have a tax system that lets very large companies like Starbucks be on our High Street and pay no tax, and are competing with small, locally owned businesses, who are paying tax on all their profits, then there's something very clearly wrong with our tax system.'

Starbucks is not alone in facing criticism for its low tax bill.

In April, a report in the Guardian newspaper said that online retailer Amazon had generated sales of more than $12.2bn in the UK over the past three years but had not paid any corporation tax on the profits from those sales.

Source: Agencies


AJE News Europe
Last Modified: 16 Oct 2012 20:16
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