Starbucks tax loophole sparks crackdown in UK

Nov. 6, 2012

Following a Reuters' report about Starbucks' international tax loopholes, the chancellor of the U.K. and the German finance minister have joined forces to stop tax evasion practices by multinational companies.

Reuters' report showed that Starbucks has not paid tax in the U.K. for three years.

According to the Guardian News, Vince Cable, U.K. business secretary, said these companies are "taking from the British economy and putting little back ... At times of hardship, to discover that leading multinationals are getting away with it is not acceptable."

The partnership between the U.K. and Germany looks to strengthen international tax standards, and would include working with the Organisation for Economic Cooperation and Development to identify gaps in tax laws.

A joint statement from the two countries said:

International tax standards have had difficulty keeping up with changes in global business practices, such as the development of e-commerce in commercial activities. As a result, some multinational businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated, thus minimizing their tax payments compared to smaller, less international companies.

A progress report is expected in February 2013.

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Topics: Coffee / Specialty Beverages , International , Operations Management

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