Starbucks pays first tax since 2008

Starbucks has made its first corporation tax payment to HMRC since 2008, paying £5m for the first six months of the year despite the business making a loss of £30m in the UK.

The coffee shop chain will reveal the amounts in its annual report, which is set to be published as early as this week, saying that it has started the process of paying the £20m over two years it promised in 2012.

Brimstone52: "The figures will reveal that the business is still making an annual loss of £30.4m" If there were a stand alone company trading in the UK they would have gone under long ago. Paying artificially high prices to their "in house" international suppliers is simply a means of hiding profits and thus mitigating their tax liability.

Oliver Jones: It's globalisation. Britain claims to cherish globalisation, yet wants all companies to pay high taxes in Britain instead of using offshore (global) means of reducing their tax bill. Reinvoicing is part of the game when you adjust your books - legally - to make sure that most (if not all) of your tax liabilities occur in low-tax countries or tax havens. Just as globalisation allows the reduction of operational costs, it also allows the reduction of taxes paid. You either accept this or you don't: If you want companies to pay your local taxes, you either need to get in line and make your taxes competitive with other countries (i.e. slash them - and slash your Socialist spending budget in line with this) - or recognise that globalisation simply isn't for you, and start imposing exchange controls (including taxation at the point of transfer) - and the consequences (less investment) that come with this. So, which will it be?

Brimstone52: By your logic, a country which collects no taxes should be the most prosperous, e.g. Somalia. Obviously, it isn't so your notion holds no water (or coffee). As always, there is a balance to be struck. The problem that many people have with the antics of Starbucks, Amazon and others is that they are taking from the UK, and other relatively high tax countries, but not contributing to that which allows them to function such as the education of their workforce, the transport network, the emergency services etc. When challenged, they stand hands outspread, palms forward and whine that they're behaving perfectly legally, which they are. This is typical "wide boy" or "spiv" behaviour.

Oliver Jones: At the end of the day, the law allows for this. Rather than blame the wide-boys and spivs, try looking at the system that created them and allowed them to do what they do. It is NOT Starbucks or Amazon who are not contributing to the education of the workforce, fire-fighters, et cetera - it is the government who is not contributing, by allowing laws that prevent effective collection of revenue from companies to stay in place! How Britain funds its national insitutions and infrastructure is none of Amazon's business - nor should it ever be. By the way, I never said taxes are a race to the bottom - although some countries manage it better than others. Somalia is a poor example of a country that charges 0% in taxes, because the Netherlands does this also, as far as licencing intellectual property is concerned, and they're not exactly comparable to Somalia. Enforcing any perceived property rights you think you might have in Somalia might prove interesting! But some countries that collect very low amounts of tax (above 0% for any given activity, obviously) do very well out of it. I live in Basel, Switzerland - and I pay about 33% in taxes and social security. If I lived in canton Zürich, the figure would be about 25%. In Zug, it would be about 20%. Oddly enough, Zug collects a hell of a lot of revenue - many more companies are willing to pay Zug-level taxes than they are, say, Basel-level (or Geneva-level, which are the highest in Switzerland.) If I founded a business that turned over enough profit to justify paying rent in Zug (which can be as high as 7'000 CHF a month for a residence that might cost 2'000 CHF in Basel), I would unashamedly base that business in Zug. As far as any business is concerned, taxes are just another cost - what you earn does not count: It's what you manage to keep!

Jonathan Burkitt: I would rather jump off a Swiss mountain than live in Basel, I hate that city it has to be one of the worst in Switzerland (no offence).  Zug is without a doubt a business hotspot having over 12,900 registered businesses for a population of 25,000. While Zug is the cheapest on income tax on average, the majority of the super rich aim to live in Freienbach or Wollerau   Kanton Schwyz, which is the lowest for the millionaires. It also usually offers them them a lovely view of Zurisee and within a simple train ride from Zurich itself.   These properties are all well over a million. They also have the lowest rates of corporation tax, but as property there is so expensive (far over the CHF 7,000 figure) and has little land to build an office it is not the super hot spot for businesses.  http://www.pwc.ch/user_content/editor/files/chall_adv/pwc_switzerland-an-excellent-choice_e.pdf P.s I lived in Zurich/Zug 18 years.

foxenburg: @Brimstone. Presumably they pay business rates, for which one gets bugger all in return. They also pay wages, to which they contribute payroll taxes and the employees also pay tax. And then there's the VAT charged on their goods. So I'd say these companies contribute. 

Jonathan Burkitt: Their employees paying tax does not count! Without any staff Amazon could simply not operate and sell its goods, someone needs to pack and ship the goods. It is no charitable act giving jobs, they take the minimum requirement like any company to get maximum profits.  There is simply no dodging paying staff now is there, unless they want to get done for slave labour.  You say they don't get anything in return for their business rates? Well I am sure the lorries and vans that ship the goods about require roads, paid for by the tax payer.  I am sure they require somewhat educated people, education is paid for by the tax payer.  I am sure they benefit from security like police, paid for by the taxpayer.  I am sure they are benefiting from the government subsidies in superfast broadband, allowing more rural houses to get online (inreasing their customer base), ohh guess what its being paid for by the tax payer… So yea I do think companies benefit, while they might not notice some benefits they are there.   Also as    mentions Amazon received more grants than it paid in taxes, meaning it benefited again from the tax payer…  So nope it does not contribute.

Oliver Jones: Lorries and vans are paid for by rental or delivery charges. If Starbucks pays for a delivery of coffee, they already pay this. Where's the problem? Road costs are paid for by road taxes (included in above charges.) Any delivery firm must tax its vehicles for road use, pay whatever fuel duty that needs to be paid, and this is charged to the recipient. Where's the problem? Imported educated workers (common today) costs the UK nothing. Many British graduates also have to pay back student loans. Where's the problem? Police are paid for from council taxes, which all UK-resident firms pay as part of their expenses, especially for commercial property. Where's the problem? If the government chooses to subsidise something, that does not present an argument to do the same. That would be like paying foreign aid payments to India and expecting the Indians to buy British military hardware instead of French. Oh, wait… The British government is in charge of tax law, and expecting a company to make contributions to the state based on some feeble justification of necessity is a bit like expecting a lion to not kill a pregnant zebra - it is out of scope of the lion's objectives. If you expect companies - and not governments - to ensure that the right taxes are paid, then you're on a hiding to nowhere, because the job of looking after any country always falls on the government, not the companies that choose to do business there. Government, not companies, are responsible for establishing competitive conditions for conducting business - and for ensuring that law and order that supports the appropriate taxation of said activity is in place. The UK government is clearly not up to the job, but that is not the fault of Amazon, Starbucks et al.

Brimstone52:     "So I'd say these companies contribute. " That's what I'd expect a spiv to say. There was a recent report which showed that Amazon received more in grants than it paid in taxes.

paulweighell: It mitigates nothing as they have to pay the tax in the nation they book the sales to. Lost tax to the UK is gained tax elsewhere. Tax paid here is lost to other nations. If the UK wants a tax war with other nations it may well lose it.

Letter_from_Captain_Swing: Nonsense and you know it. Tax avoided here is not paid in other countries, it is retained by the owners. As clearly illustrated by Apple, who have divisions not registered anywhere for tax or do you mean the 0.02% tax they pay in Ireland makes up for the taxes evaded in the UK

Brimstone52:     "Lost tax to the UK is gained tax elsewhere." Perhaps if I had said "mitigating their UK tax liability" it might have been easier for you to understand.

bill40: brim, If you wish to explain anything to Paul talk very slowly, use short words and perhaps some simple pictures.

paulweighell: You made me laugh anyway Bill / Brimstone so thanks. It's a global market and if you make the UK a less attractive place to do business then you will lose it. Short sighted tax hikes to support excess public sector largesse are not going to make the UK more attractive or better able to compete globally. It's sad your vision is so limited that you cannot see the consequences. Try thinking a little beyond national shores and just a few months ahead?

bill40: paul, There's nothing like a good bunfight on a Sunday, I'll convert you yet!

paulweighell: I will enjoy the attempt Bill :-)

bill40: Easy tiger!

Letter_from_Captain_Swing: Germany has higher Corporation Tax than us and is a more successful economy. Bulgaria has 10% Corporation Tax, must explain why Brits will be flooding there in January The Public Sector largesse is milked by Corporations, who are biggest beneficiaries of huge contracts and hand outs.

nickk: Letter, it has lower taxes on businesses because businesses do not pay tax. Personal taxes are higher, but corporation taxes are lower. The simple truth is, Germany realises the basic economic truth that you haven't understood.

bill40: paul, You're worse than my wife she doesn't listen to me or understand me either. Taxes do not need raising they need reforming. Lawson had it spot on; keep 'em low, simple and compulsory. Adam Smith was right when he called for free markets as in markets free of the rentiers. That means getting tax off labour and full employment. It means Land Value Tax, Positive Money and the Job Guarantee. it means that neo liberalism must be defeated. Nobody believes in austerity anymore or that money is somehow scarce, look at Brazil. Look at the state of journalism and economics that write shill pieces and fiddle spreadsheets. Worst of all look at the politicians selling out to their rich backers.

Brimstone52:  Well said Bill.

Brimstone52:     "If you wish to explain anything to Paul" Thanks Bill, I'll try to remember. I can understand that some people need everything spelt out in words of one syllable. What I don't understand is why they insist on making their misfortune so public and causing everyone else so much agro.

paulweighell: brimstone, Your lack of precision does indeed show in public.

Brimstone52:     "lack of precision " People who are not trying to find fault understand the concept of "context".

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