Starbucks to review British tax arrangements

PHOTO: Starbucks to review British tax arrangements

LONDON - Global coffee giant Starbucks said Sunday it was reviewing its tax affairs in Britain after it took a roasting from lawmakers and campaigners who accuse the chain of paying too little.

The Seattle-based firm admitted that "we need to do more" although it would not confirm a report in Britain's Sunday Times newspaper that it will promise this week to increase the amount of corporation tax it pays.

"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," Starbucks said in a statement.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC (Her Majesty's Revenue and Customs) for some time and is also in talks with the Treasury (finance ministry).

"We will release more details later in the week."

Starbucks had previously confirmed that it did not pay any corporation taxes in Britain for the past three years on sales worth £400 million (S$782.67 million).

It was able to do so by paying fees to other areas of its business - such as "royalty payments" for the use of the brand - which resulted in the company posting a series of losses and not having to pay any corporation tax.

The Sunday Times said that since coming to Britain in 1998 the chain has paid just £8.6 million in corporation tax despite generating £3 billion in revenue.

The spokesman added: "Starbucks is committed to the UK for the long term and we have invested more than £200 million in our UK business over the past 12 years.

"Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked."

The Public Accounts Committee - a panel of British lawmakers - is due to release a report this week which is expected to criticise the measures used by corporations to avoid paying tax as the rest of the country grapples with tough austerity measures.

The committee quizzed senior figures from Starbucks, US online retailer Amazon and Internet search giant Google.

During the hearing Margaret Hodge, a Labour party lawmaker who chairs the committee, said Starbucks' claim that its British division was unprofitable "just doesn't ring true".

Starbucks has faced calls by activist groups for a consumer boycott in recent weeks.