Reuters: Starbucks avoiding UK taxes

Oct. 15, 2012

Starbucks in Britain hasn't been paying its share of taxes, according to a story published this morning by Reuters. Although legal, the story sheds light on the tactics the Seattle-based company has used to pay only 8.6 million pounds in taxes on the more than 3 billion pounds its made in profits since it opened in 1998.

Over the past three years, Starbucks has reported no profit nor paid income tax on sales of 1.2 billion pounds in the United Kingdom. Conversely, McDonald's paid more than 80 million pounds on 3.6 billion pounds of U.K. sales, whle KFC had a tax bill of 36 million pounds on 1.1 billion pounds in U.K. sales.

No one is suggesting Starbucks has broken any laws, even though it has only paid an average tax rate of 13 percent, one of the lowest in the consumer goods sector. Michael Meacher, a member of Parliament for the Labour Party, told Reuters that Starbucks' practice "is certainly profoundly against the interests of the countries where they operate and is extremely unfair ... they are trying to play the taxman, game him. It is disgraceful."

However, Troy Alstead, Starbucks' CFO, disagreed, saying the company strictly follows international accounting rules and pays the appropriate level of tax in all the countries where it operates.

A spokeswoman also told the publication via email that: "We seek to be good taxpayers and to pay our fair share of taxes ... We don't write this tax code; we are obligated to comply with it. And we do."

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