Starbucks Agree To Pay More Taxes

Coffee retail giant Starbucks said it is ready to pay some £20 million (or $30 million) in company taxes even if it means the company would not make any profit.

While many think the act is laudable, the move appears to have backfired and further fueled the controversy surrounding its UK operations.

In an attempt to put a halt on the controversy it is facing, US-based company Starbucks said it will pay or pre-pay its taxes for the next two years, which amount to some £10 million.

According to UK statistics, Starbucks paid about a total of £8.5 million in company taxes in the last 14 years. Starbucks’ UK sales in the same period amounted to some £3 billion. When calculated, Starbucks only paid a tax rate of below one percent.

Starbucks UK managing director Kris Engskov said that the payment plan should be considered as an “unprecedented commitment” of the company to the Revenue and Customs. He, however, said this has not been shared yet with the Revenue and Customs.

Engkov said the company would also not claim deductions for the royalties Starbucks gets from its Amsterdam office. Other royalties also come from capital allowances, coffee purchases, inter-company loans, among others.

The Starbucks UK managing director said the company has been reeling from the controversies surrounding the taxes it pays. Engkov added that Starbucks customers have also been emotional because of the tax row.

Industry observers and tax experts, however, said Starbucks’ proposal is just “emotional gobsmacking.” Some also believe that Starbucks is making a joke of the UK’s tax system and a pure PR stint.