Starbucks May Be in Hot Water in the U.K.

by Christopher Freeburn | October 17, 2012 11:36 am

Starbucks (NASDAQ:SBUX[1]) is facing questions from British lawmakers about taxes it hasn’t paid in the U.K.[2]

Members of parliament noted that the coffee chain had informed investors that its British operations were turning a profit, but at the same time claimed a loss for the unit in tax filings. The lawmakers said Starbucks hasn’t paid taxes despite generating U.K. sales of $1.93 billion since 2009, Reuters noted.

Labour Party MPs have requested that the government’s tax authority — Her Majesty’s Revenue & Customs — open an inquiry into the matter. Two committees in parliament plan to question officials about Starbucks’ tax status and could ask for company representatives to appear before them. They were joined by at least one Conservative Party MP.

The tax authority dismissed allegations that Starbucks was avoiding taxes, insisting that international business are assessed taxes as required by law.

Starbucks said its tax filings complied “to the letter of the law” in the U.K.

Similar questions have recently been raised over the amount of tax payments made by other American companies doing business in Britain[3], including Google (NASDAQ:GOOG[4]) and Facebook (NASDAQ:FB[5]), the BBC noted.

Shares of Starbucks declined fractionally in Wednesday morning trading in New York.

Endnotes:
  1. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  2. taxes it hasn’t paid in the U.K.: http://www.reuters.com/article/2012/10/17/us-britain-starbucks-tax-uk-idUSBRE89G0D920121017
  3. other American companies doing business in Britain: http://www.bbc.co.uk/news/business-19967397
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB

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