Starbucks Says May Pay More UK Tax

Getty Images

Coffee chain Starbuckssaid it was considering changes to its U.K. tax practices, whichallowed it to make billions in revenue while paying little inincome taxes, following criticism from lawmakers, taxcampaigners and the media.

A Reuters examination of Starbucks accounts published inOctober showed the company had reported 13 years of losses atits U.K. unit, even as it told investors the operation wasprofitable and among the best performing of its overseasmarkets.

The chain's UK unit paid no corporation tax — a tax on acompany's income — in the last three years for which figures areavailable and has only paid 8.6 million pounds income tax since1998, despite racking up 3 billion pounds ($4.8 billion) ofsales.

The revelations led to calls for a boycott of the store andprotests at its branches, and the company's Chief FinancialOfficer Troy Alstead was called to give evidence to aparliamentary committee.

Should Corporations Get Away With Avoiding Tax?

Starbucks repeated on Sunday that it had always complied with British tax laws and blamed its low tax payments on a tough operating environment in the U.K.

However, a spokeswoman added in an emailed statement that the public mood had caused the company to reconsider its tax arrangements, which include inter-company royalty and interest payments that reduce the U.K. unit's taxable profit.

"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more," she said. "As part of this we are looking at our tax approach in the U.K. The company has been in discussions with HMRC for some time and is also in talks with the Treasury."

The company, the largest coffee chain in the world, with a market value of $39 billion, said it would release more details later this week.

The Public Accounts Committee, which grilled Alstead and managers from Google and Amazon over their tax planning, is due to release its report on corporate taxation in the UK on Monday.