The American company Starbucks offered to pay in UK tax of 10 million pounds in each of the next two years, in an attempt to regain customers outraged by the information that the last three years it has not paid any income tax. The global coffee company announced that it will make the tax payments even if makes no profit in the UK. There is no legal foundation for Starbucks to make the voluntary tax payment.
Starbucks UK general manager, Kris Engskov, said he was surprised by public discontent caused by accounting arrangements used by the company and promised to make payments to HM Revenue and Customs in UK for two years, even if didn’t make a profit, according to the Guardian.
Politicians and tax experts have however said that the unilateral decision, which was not discussed with the authorities in the field, is a mockery to the tax system. The tax authorities also reiterated their position that income tax is not optional.
Starbucks unprecedented announcement was made at the Chamber of Commerce in London, where Engskov said that the company will announce changes resulting in paying a higher tax in the UK, beyond the level required by law.
“This decision is the correct gesture. We heard this loud and clear from our customers,”
said Engskov.
Starbucks has avoided in the past three years any tax payment through complex international payments within the group. So far, Starbucks recorded losses due to payments to division in the Netherlands, where coffee beans are roasted and the one in Switzerland, for the purchase of the coffee beans.
However, according to the study by Tolley Tax, Starbucks might profit even more globally after its decision to voluntary give £20 million in corporation tax payments in UK. Due to complicated tax rules, the company could move profit from elsewhere in the world to UK, therefore decreasing profit in other countries and paying less tax there.
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