Starbucks pays £8.1m UK corporation tax | Starbucks
Starbucks paid almost as much corporation tax in 2015 as it did in its first 14 years in the UK after bowing to pressure to scrap its complex tax structures.
However, it has always faced criticism for a lack of transparency that makes it difficult to determine whether it pays a fair amount of tax on its frappuccinos and espressos.
The Seattle-based cafe recorded a pre-tax profit of £34.2m for the year to the end of September, up from £2m the year before.
The improvement came despite a drop in sales from £409m to £405m, as it offset lower revenue by cutting expenses and selling company-owned stores to franchisees.
He also paid £8.1million in corporation tax at a rate of 24%, higher than the UK corporation tax rate of 20% due to a one-time change in accounting practices.
The tax contribution for 2015 was only slightly lower than the £8.6million she paid in the 14 years since her UK debut in 1998, despite sales of £3billion that year. era.
Starbucks became the poster child for corporate tax avoidance in 2012 after details of its meager tax contribution came to light. He has been accused of using artificial corporate structures to shift profits from the UK to low-tax jurisdictions.
The fury prompted an agreement with HMRC to waive tax deductions and pay £20million in voluntary corporation tax over two years, including £11.2million last year.
Starbucks also shut down a UK company named Alki that was part of a labyrinthine network designed to cut taxes at its former European office.
Elements of its European tax structure were deemed illegal by the European Commission in October, and millions of euros in fines are expected to follow.
Tax accountant Richard Murphy said it was impossible to know whether Starbucks was still aggressively avoiding taxes until the accounts of its European parent company, Starbucks EMEA, were released.
“The company reports profit and appears to pay a fair rate of tax, but the fact is that we have no idea if the profits on which tax is paid are reported fairly.
“So we have no idea what royalties are paid to related companies, what use Starbucks still makes of tax havens, and whether, as a result, fair tax is paid on profits reported in the UK.
“If companies like Starbucks claim to pay a fair tax, they must realize that it is much more complicated than calculating a percentage tax rate. It’s showing that profit is right which is now the critical problem and Starbucks is far from doing it.
Murphy called on Starbucks to join the Fair Tax Mark program, of which he is a director, a watermark system for companies that pay their share to the Treasury.
The rise in the coffee company’s UK tax bill is partly the result of a strong year in which like-for-like sales rose 3.8%.
Starbucks said in-store technology, such as wireless charging Powermats and super-fast Wi-Fi, helped boost sales. It also cut costs by renegotiating leases, closing unprofitable stores, and selling others to franchisees. Administrative expenses were reduced, while benefiting from lower coffee prices, leading to an increase in its operating profit margin from 0.5% to 6.9%.
Starbucks opened four new company-owned stores, 29 franchise and 21 licensed stores, which it said created 800 new jobs.
The company plans to start offering its baristas the “National Living Wage” to staff from April 2016, including those under the age of 25. This should start at £7.20 an hour, less than the Living Wage Foundation’s latest recommendation of £8.25 (or £9.40 in London).
The group’s highest-paid director pocketed £282,842 during the year, including pension contributions.
- This article was modified on December 16