Roo’s £6m tax loss
UK Starbucks arm makes £162m profit.. but pays rate of just 2.8%
COFFEE giant Starbucks has been slammed for paying just 2.8% tax on the profits raked in by its biggest UK-based business last year.
The standard rate of corporation tax in the UK is 19%.
The company managed to slash its bill by claiming it had already paid tax on a bumper dividend from its Dutch arm.
Starbucks EMEA Ltd collects royalties from more than 3,000 directly owned and franchiseerun stores in 40 countries.
Of the £162million profit it made last year, £114million was a dividend from its Dutch business, where its roastery is based. Starbucks said it paid tax on the dividend in Holland, but refused to say how much. It had the affect of cutting its UK corporation tax bill to just £4.5million. Shadow Chancellor John McDonnell said: “It is a scandal this Government is letting these big corporations get away with paying so little tax. When we get in power, that will change.” The European operation moved to the UK in 2014. Tax campaigners have criticised Starbucks for its “incredibly complex” corporate structure.
Paul Monaghan, chief executive of the Fair Tax Mark, said: “Its accounts raise more questions than they answer.”
The details emerged in accounts for UK-based Starbucks businesses filed at Companies House.
They include Starbucks Coffee Company (UK) Ltd, which banked £372million in sales. Yet its corporation
bill halved to £3.3million after a sharp fall in profits. This was blamed on the cost of investment and “challenging” trading conditions.
However, it still managed to pay a £46million dividend last year to its US headquarters.
A spokeswoman said the payout was due to a shake-up of a financing arrangement with its parent company.
Starbucks claims it has simplified its tax structure in recent years, with sales from UK shops now booked here.
Other multinationals including Google and Amazon have been accused of using clever accounting to move profits abroad and slash their tax bills.
LAST week it was Amazon, this week it is Starbucks.
These US giants make millions of pounds in profit in this country but drag their feet when it comes to paying their fair share of taxes.
Starbucks will tell you its use of clever and complicated accounting methods is all above board. However there is a big difference between what is legally right and what is morally right.
While these firms employ expensive accountants to minimise tax bills it is left to the rest to plug the hole in the Treasury coffers.