Starbucks at centre of another row over corporation tax bill
STARBUCKS was last night embroiled in a fresh row over the level of corporation tax it pays in Britain.
The US coffee chain faced claims that a key European unit, which is based in the UK, paid just 2.8 per cent of its profits to the taxman – a total of only £4.5million.
The controversy is another embarrassment for the Church of England, which has Starbucks among its top investments. Archbishop of Canterbury Justin Welby was ridiculed last week after he lambasted Amazon over its tax arrangements despite the Church investing tens of millions of pounds in the retail tech giant.
Starbucks’s tax affairs came under the spotlight yesterday amid growing scrutiny of big businesses following major concerns they are paying too little.
Rob Palmer, of Tax Justice Network, said: ‘It’s really difficult to know what is going on in big companies accounts as we don’t have access to all the information. The Government has slashed corporate tax rates – even business groups are saying it does not need to be that low.’
Prem Sikka, professor of accounting at Sheffield University, said: ‘They [the Government] are engaged in a race to the bottom appeasing big corporations.’
Starbucks’s key European business, UK-based Starbucks Emea Ltd, which collects royalties from licensed stores across Europe and the UK, paid £4.5million corporation tax on profits of £162million – a rate of about 2.8 per cent.
That figure includes a dividend payment from another group entity which had already been taxed. When stripped out, the tax rate rises to 9.4 per cent. The UK corporation tax rate is 19 per cent.
Starbucks insisted this was only a partial assessment of its accounts and it pays an effective tax rate of more than 20 per cent.
Its main UK entity, Starbucks Coffee Company, which runs its UK stores, paid £3.3million tax on £4.5million of profits, an effective rate of 73 per cent.
A spokesman said: ‘Starbucks pays all its taxes and meets all international tax standards and regulations.
‘Starbucks’s UK-headquartered businesses paid £13.7million of corporation tax in the year to October 2017, an effective tax rate of 25.3 per cent.’
The Church of England said: ‘We recognise concerns about the levels of corporate tax paid by some companies. We believe governments are best placed to address this pressing issue.’
It added: ‘We also engage with all companies, identified by our third-party data providers as lagging behind the standards set by their peers, to encourage them to disclose the tax they have paid on a country by country basis.’
TAX rises will be needed to pay for the £20billion-a-year spending boost for the NHS, Theresa May said yesterday.
But she vowed the extra revenue would be raised in a ‘fair and balanced’ way.
Her comments come despite a pledge before the general election that she intended to reduce the taxes on working families.
‘Appeasing big corporations’
ON the day the Prime Minister warns all households to expect ‘balanced and fair’ tax rises, it is claimed that Starbucks effectively paid the Treasury as little as 2.8 per cent on UK profits of £162million last year.
Leave aside this latest embarrassment to that scourge of tax-dodgers, the Archbishop of Canterbury – whose church happens to own a chunk of the American coffee chain.
This paper understands Mrs May’s need to finance the extra £20billion she has promised the NhS. But Britain is already on course for the heaviest tax burden since harold Wilson’s government in 1969-70.
how can she claim she is forced to sting us for more, while Starbucks and other multinationals exploit loopholes – or fix sweetheart deals with hMRC – to avoid paying anything like their due?
That’s not to mention the £13billion a year ministers squander on aid to countries including mega-rich China.
As a Tory, Mrs May should remember that excessive tax rates can yield lower returns for the Treasury. Before increasing the burden on the Just About Managing, she should tell the Chancellor to focus on closing those loopholes and cutting the waste.