Starbucks vows to pay 'somewhere in £10m range' in tax

 
p80 LONDON, ENGLAND - OCTOBER 16: The signage on a branch of Starbucks Coffee on October 16, 2012 in London, England. It has been reveled that Starbucks, the world's second largest coffee chain, has paid no tax in the UK for the past three years despite sales exceeding 1 billion GBP. Since first trading in the UK in 1998 Starbucks has paid 8.6 million GBP in income tax with total sales of over 3 billion GBP in the same period.
Getty

Shamed coffee giant Starbucks today caved in to pressure to pay more tax, promising to cough up around £10 million in each of the next two years.

In a victory for consumer power and a committee of MPs, the company said it had “heard loud and clear” he message that avoiding tax was not acceptable in austerity Britain.

UK managing director Kris Engskov said: “With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more.”

The U-turn followed outrage at the revelation that Starbucks paid just £8.6 million in corporation tax over 14 years of trading on Britain ‘s High Streets - and zero in the past three years.

Margaret Hodge, who chairs the Commons Public Accounts Committee, said it was “a welcome first step” but called on the firm to go further.

“They are doing the right thing but what we want is a real change of attitude,” she said. “And we want the other companies to follow this example.”

Seattle-based Starbucks will stop cutting its tax bill by offsetting controversial “royalty” payments to overseas parts of the global company, such as fees for using the iconic brand.

Mr Engskov admitted: “The emotion of the issue has taken us a bit by surprise”.

“These decisions are the right things for us to do,” he said. “We’ve heard that loud and clear from our customers. And today, we’re taking the actions necessary to pay more corporation tax in the UK.”

Amazon, Google and Starbucks were all accused of “immorally” avoiding tax in a scathing report by the PAC.

Starbucks has more than 700 outlets in the UK but paid little tax because it paid fees to other parts of its global business, such as royalty payments for the use of the brand. The lawful dodge meant Starbucks UK ran at a loss in the eyes of the taxman and did not have to pay corporation tax.

Rival chain Costa, by contrast, recorded £377 million sales last year but paid £15 million tax.

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