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Starbucks tax u-turn

Starbucks tax u-turn

Starbucks has said it will pay corporation tax "above what is currently required by law" even it fails to make a profit.

The coffee chain's UK managing director Kris Engskov said the company would pay £10m in taxes over the next two years after it was criticised for failing to pay corporation tax in the UK, following an investigation by Reuters.

Giving a speech at the London Chamber of Commerce, he said: "I am announcing changes which will results in Starbucks paying higher corporation tax in the UK – above what is currently required by law.

"Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges.

"In addition, we are making a commitment that we will proposed to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years.

"These decisions are the right things for us to do. We've heard that loud and clear from our customers."

Public Accounts Committee chair, who has repeadly taken Starbucks and other to task over the issue, said the move was "a welcome step in the right direction".

Speaking on Sky News, she added: "Clearly they’ve got to pay the right amount of tax for the profits they make in the UK. But underpinning that are a lot of the issues we realised in our inquiry as to how they were exporting profits to avoid tax, and they’ve recognised that and mitigated that."

Green Box: Starbucks tax u-turnClick to open

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On air

Margaret Hodge: Starbuck tax payment a welcome step

06/12/2012 on Boulton & Co, Sky News