How Starbucks Avoids UK Taxes

Accounts for Starbucks's coffee chain's UK operation show it has paid almost no tax on revenues of $5 billion over the past 13 years. In September Starbucks CEO Howard Schultz joined London's Mayor Boris Johnson to reveal plans to hire a thousand new apprentices in the UK. Schultz and Kris Engskov, Managing Director of Starbucks UK, were all smiles for the camera, talking to current apprentices and trying to rustle up a perfect latte. But the coffee giant's big boss was not quite as comfortable talking about Starbucks's British tax bill. Starbucks Chief Financial Officer Troy Alstead said the company strictly follows international accounting rules and pays the appropriate level of tax in all the countries where it operates. A spokesman added, "Starbucks is committed to both paying our fair share of taxes and to maximizing the value of our shareholders' investment." But tax campaigners like Richard Murphy find it difficult to reconcile the group's values and the way it files it taxes in Britain. Starbucks' ability to avoid taxes on its UK earnings gives it a competitive edge over domestic rivals. Independent cafe owners like David Abrahamovitch can't escape the tax man by shifting profits into offshore tax savings. Accounts filed by Starbucks for its UK unit, says it has never made a profit. Meanwhile, management has consistently told investors that the British operation was one of its most profitable. Financial analysts say a company's primary responsibility is to its shareholders. And this means, Starbucks has a duty to take advantage of any loophole it can find.