Starbucks Volunteers to Pay More Taxes

by Nate Wooley | December 7, 2012 8:35 am

Coffee Starbucks3 300x199 Starbucks Volunteers to Pay More Taxes[1]Coffee giant Starbucks (NASDAQ:SBUX[2]) has offered to pay more taxes in the United Kingdom amid outcry over perceived skirting of the tax code.

The move — announced by King Engskov, the managing director of Starbucks U.K. — comes after a public outcry arose when it was revealed how little corporation tax the chain pays the U.K. government, according to the BBC[3].

In its 14 years in the U.K., the firm has paid as little as £8.6 million in corporation tax, and none from 2009-11 — that despite company sales in 2011 that came in at more than £400 million. Using the existing U.K. tax system, the company has reported a profit only once during its time there.

However, though it claimed a $60 million loss on its taxes last year, the firm reported a $40 million profit in its 2011 report to shareholders, which inspired a careful look at the chain’s accounting practices by several eurozone governments.

Starbucks is expected to pay around £20 million ($32 million) across the next two years.

The coffee chain has been the subject of organized boycotts and protests over its U.K. tax issues. The firm said, in a statement, that the level of hostility had taken it by surprise. It hopes that paying taxes voluntarily will begin to rebuild its customers trust.

The problem is not limited to Starbucks. Other firms, such as Amazon (NASDAQ:AMZN[4]) and Google (NASDAQ:GOOG[5]) have come under fire in Europe for similarly paying little or no taxes[6] while reporting profits to shareholders.

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Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/Coffee-Starbucks3.jpg
  2. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  3. according to the BBC: http://www.bbc.co.uk/news/business-20624857
  4. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  5. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  6. similarly paying little or no taxes: http://investorplace.com/2012/11/france-says-amazon-owes-252m-in-taxes-good-luck/
  7. Starbucks Launches Super-Premium Gift Card for Big Spenders: http://investorplace.com/2012/12/starbucks-launches-super-premium-gift-card/
  8. Starbucks Tells Taxman, Investors Two Different Stories: http://investorplace.com/2012/11/starbucks-tells-taxman-investors-two-different-stories/
  9. Starbucks May Be in Hot Water in the U.K.: http://investorplace.com/2012/10/starbucks-may-be-in-hot-water-in-the-u-k/

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