Starbucks is ‘leeching’ tax money from Britain, claims ex-minister Lord Myners

 
Boycott urged: Starbucks Coffee
Peter Dominiczak13 November 2012
WEST END FINAL

Get our award-winning daily news email featuring exclusive stories, opinion and expert analysis

I would like to be emailed about offers, event and updates from Evening Standard. Read our privacy notice.

Major multinational companies such as Starbucks are “leeching” money from the UK through tax avoidance, a former City minister alleged today.

Lord Myners claimed the multinationals made millions in revenue in Britain but a “negotiation between their left hand and their right hand” in which they pay royalties to offshore entities ensured that officially they made no profits in Britain.

Corporation tax is payable on profits only.

Starbucks strongly rejected Lord Myners’ claims, which he made on BBC Radio 4’s Today programme.

Executives from Starbucks, Amazon and Google UK were today set to give evidence on tax avoidance to Parliament’s public accounts committee.

Several multinationals have been accused of paying little or no tax on their UK earnings, having created corporate entities in low-tax jurisdictions.

Lord Myners claimed the coffee chain has been able to pay little tax as “they pay large royalty payments, payments for the use of the Starbucks brand and image”. He added: “They pay for their coffee, they buy their coffee through offshore centres from the developing countries and charge it on at a higher price to a country like the UK. So they ensure they don’t make a taxable profit.”

He described the system as “a negotiation between their left hand and their right hand overseen by extremely expensive accountants and lawyers in expensive offices in places like the Cayman Islands and Luxembourg in order to facilitate the leeching of tax from developed countries into tax offshore havens”.

A spokesman for Starbucks said: “We don’t have any entities set up in tax havens for tax optimisation purposes.

“We have country operations in the UK, our European Regional headquarters and blending and roasting operation in Amsterdam, and our global coffee buying unit in Switzerland where 75 per cent of the world’s coffee is traded.”

The spokesman added: “Despite what has been implied, Starbucks European structure has no impact on our taxable profit in the UK. In fact, the licence fees we deduct for UK tax purposes are frequently negotiated and renegotiated between Starbucks and local country tax authorities. Our overall tax rate last year globally was 32.3 per cent, almost double that of most other multinational companies.”

MP Margaret Hodge, who chairs the public accounts committee, told Parliament last month that major companies that operate in Britain have avoided nearly £900 million of tax.

Protesters from UK Uncut are today expected to attempt to turn Starbucks into creches and homeless shelters.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in