Starbucks Coffee Company in the UK
I'm writing today to address recent media coverage regarding how we at Starbucks pay our taxes.
I want to personally assure you that Starbucks pays and will continue to pay our share of taxes in the UK to the letter of the law. We always have and always will.
The UK is an important market for Starbucks, and we place a great deal of value in our relationship with the many customers who have come to our stores over the past 14 years we’ve done business here.
We pride ourselves on doing business to the highest ethical standards, from the way we source our coffee to the way we pay our taxes.
We are here for the long-term. And, are rising to the challenge of creating jobs and investing significantly in our business and in the UK economy, demonstrating our commitment to all the communities where our partners (employees) and customers live, and where we do business every day.
In the UK,
- Starbucks employs more than 8,500 people across the country – and many, many more through our licensee partners
- Over the next five years, we are committed to creating an additional 5,000 new jobs in the UK by opening 300 new stores and growing our business
- We recently increased our commitment to our apprenticeships scheme, offering new places to 1000 young people over the next 2 years
- We proudly spend hundreds of millions of pounds every year with a number of local businesses – from farmers to sandwich and cake makers to shop fitters, and countless others in between.
The UK is one of the most competitive and dynamic espresso markets in the world, and we’re proud to do business here. As we continue to grow, we will employ more and more partners and contribute to the communities where we do business in new and meaningful ways.
Thank you for listening and I look forward to reading your comments and suggestions.
Kris Engskov
Managing director
Starbucks Coffee UK
Change Region
Im disgusted at this. £8.6m tax on sales of over £3bn. You ought to be ashamed of yourselves. You claim you're an ethical company, well, I would disagree. I certainly won't be visiting any of your "shops" again any time soon.
Me too. In what way is paying 0.23% tax (£8 million) on profits of £3.6 billion (i.e 3,600 million pounds) in the UK paying their fair share? Yes, you've kept to
the "letter of the law", but everyone knows the tax laws are full of loopholes
that allow tax avoidance , especially by big multinational companies like
Starbucks, which can fiddle about with where they choose to pay tax on
each stage of the process - and they will generally choose to be billed in
tax havens where they pay nothing.
+1 no problem with business that is genuinely making low profit/loss paying little/no corporation tax, but to tell shareholders that UK business is so profitable that US business is trying to learn from it is no great.
Coffee chain love words such as 'community' and 'local' 'ethical' yet when Twinning's which supplies tea to most UK coffee shops moved production to Poland last year while playing on its English heritage , not a word from the coffee chains.
Err err... Wasn't me the lawyer made me do it and that accountant person. Just worked out that I've paid the equivalent of 5% of the sbucks bill over the same period. I don't have billions of income to show for it. What am I doing wrong everyone?
This blog article = Spin
Well done for avoiding paying corporation tax by shifting the £££'s around the world. PAT YOUR TAX ADVISOR'S ON THE BACK. REWARD YOUR SHAREHOLDERS. Keep you head down when walking past school that needs some work done or NHS hospital needs equipment.
I couldn't agree more. Despite the claims by you (Starbucks) to pay their fair share of taxes, 91% of people polled disagree with you. As has already been stated, you really should be ashamed of yourselves; it may be 'legal' but it's clearly immoral and unethical to use such aggressive tax-avoidance tactics. It would always be so, but at the moment, when so many people who REALLY pay their fair share of tax are struggling, it is lower than low.
STAND DOWN EVERYBODY, THEY BUY CAKES LOCALLY
Until you pay your taxes (including all the backdated stuff), I will not darken my milk with your coffee...
http://www.costa.co.uk/
I also think it is disgusting and I will never order a coffee again from Starbucks. It is easy to avoid tax for a big company. Simply by constantly opening stores they can avoid tax by claiming not to make any profit as it has all been spent on new stores. It might be legal to avoid tax but that is not ethical. i am also having to write this comment as a reply as it appears that they have blocked people commenting on this! not too mention how hard it is to just sign up & login to leave a comment.
Well done to MD for being quick to post a statement re the payment of taxes in the UK, but the words seem hollow compared to the detail of the accusations.Job numbers are a smokescreen. "...Starbucks pays & will continue to pay its share of taxes....." does not seem to ring true with the claims that you have paid NO Corporation Tax in three years. Yes clever transfer pricing to zero out UK profits (& hence taxes) via offshore Co's is not illegal, but its far from being right. Costa here I come !
http://www.costa.co.uk/
I am a loyal customer. I work from home, and pretty much every day, I head out to my local store with my laptop. I know many of the staff by name.
This is massively disappointing news. I can't go on patronising a company that is evading its responsibilities in this way.
Paying it's share of taxes is not the same as paying a fair share. No one thinks this is fair. It's like discovering a trusted friend has been stealing the petty cash. Just sickened by this.
Hope you figure this out.
http://www.costa.co.uk/
Rubbish. Paying tax fairly, at a rate of... a fraction of a percent?
You will not have my custom again. I will spread the word around as many people as I can. I can only imagine, given the current state of your social networking pages, that many others feel the same way.
Pay your taxes. Properly. As in, not bribing HMRC into a deal where you pay nothing for years on end.
Thanks for your response Kris, but your mealy mouthed 'everything we do is legal' response doesn't cut any ice. I shall get my coffee from one of the many UK registered companies that do pay the morally appropriate level of tax, not just the least they can possibly legally get away with.
Starbucks reduces it's corporate tax liability by trading with other Starbucks companies [starbucks Switzerland for roasting etc] Paying tax to the letter opf the law has lost politicians their jobs. We don't want Banks and large corporations to follow the letter of the law and find every excuse to avoid taxes, we want them to DO what is RIGHT. I've joined the boycott of Starbucks - the VAT will go my my local coffee shop, the exmplyment will go to my local shop
http://www.tripadvisor.co.uk/Restaurant_Review-g186338-d2434852-Reviews-Costa_Coffee-London_England.html
A company that earns as much as you do should be paying more than £8.6 million over the last 14 years. There are many people who can't afford their taxes but will pay them anyway. You should pay your fair share of taxes and be honest about it. This doesn't seem right for a supposedly ethical company.
Until this is sorted and you start paying a fair amount of tax you will not receive custom from me, I'll be sure to let others know about this. I wish you luck and hope you sort this out.
Contribute to the running of our schools and hospitals as you legally and morally should or get out of our country.
Yes, we know you're paying "to the letter of the law", but you are using the law to allow you to pay less tax than really you are expected to.
It's such a shame that you have worked so hard to improve your ethical credentials, and while this does not detract from your apprenticeships, links with local businesses and creation of more jobs, nor your support for farmers, it certainly makes me question your ethics, and thus will make me question buying from you in the future.
Hello. It's great you have responded. Unfortunately, what you've written doesn't make much sense. How can a company that has reported losses in the UK for 3 years afford to do any of the things that you write about? Financially speaking, how can you be in a position to train apprentices and employ staff and open branches? How you can you invest significantly in your business when it's not making any money? Why would Starbucks HQ invest in such an unprofitable market? Unless, of course.....
http://www.yelp.co.uk/biz/costa-coffee-london-18
I got to "by the letter of the law" and knew this was just going to be spin rather than an apology.
Its legal to have sex with a horse in many US States. Its legal in the UK to kill a Scot in Nottingham with a crossbow. Its illegal in the UK and much of America for *** couples to marry.
Some things are right, somethings are wrong. Legal status isnt always the best way to judge, morality is.
Don't want to derail this from the bigger picture, but is Starbucks
censoring the word *** in its comments?
The censoring will be automatic, as many offensive word filters include it, without programming specifically to ignore it.
You are a disgrace Starbucks. This is on Facebook and everyone knows what a set of cheats you are now. I will not set foot in one of your shops until you pay tax in MY country. Let's call it the British way - fair play and morality.
Hi Kris, getting on the front foot with your 'message' hasn't worked because it's not about what you've said, it's about what you've not said...
Paying your 'share of taxes...to the letter of the law' translates into paying your tax lawyers to exploit legal loopholes and we all know that. Seriously, everyone can see it and you're fooling nobody with this stuff. Too many US corporations are parasites outside of the States - you've lost my business on a permanent basis.
It's not a case of keeping within the law, it's keeping withing the morals of our country. You exploit a loophole - well done. Thanks for keeping money OUT of our economy.
You say that you employ people and pay local business etc. Great. So does ALL other business that also pay their tax. What about UK owned businesses that don't have overseas offices that they can "pay fees" to? Those companies do everything you do, AND pay their tax.
Hang your heads in shame.
Sorry Starbucks - I and my family will no longer use your shops until you do the right (ethical) thing and pay tax on the vast profits you are making in the UK - you insult your customers, staff and the communities you reside in by clinging to a stance that pretends you are doing nothing wrong - until then Costa gets my custom....
Pretty much agree with everything that's been said so far. --
Seems all the stuff about the ethical stuff Starbucks does is just part of
the marketing. Certainly will be buying my coffee somewhere else.
Perhaps you'd explain what the difference is between what you are doing "within the letter of the law" & what Jimmy Carr was doing with his offshore company?
Everyone, including Jimmy Carr agreed that was unethical but what you're doing is exactly the same. How on earth can you call yourselves an ethical company?
I will be buying my coffee from Costa in future. They pay their way & they employ lots of staff too. You'll find one doesn't cancel the other actually.
What upsets me most about this is Starbucks backed out of a leagally binding CSR contract with a charity partner earlier this year citing financial difficulties leaving the charity high and dry. Except in now seems there weren't financial difficulties, just Starbucks moving it's money around to avoid paying the expected level to tax.
Shame
its*
Is it just me or has the person who has written this or the people who checked over his note so stupid that they have missed the point.
The issue is about paying a fair amount of tax which you do not.
So much for being an ethical company .
Luckily where is live there are independent cafes who im sure pay tax in a manner which would be more satisfying to me, from now on i will use them .
One also cant help but wonder about the MDs tax payments on his personal income .
It is an absolute outrage that a large multi-national conglomeration like Starbucks has paid no corporation tax in the UK in the last three years. You will not receive my business again until you take a fair and moral approach to your UK tax commitments.
I think these comments sum up very well how most customers - and potential customers - feel about this issue, so I'm not going to add anything else, except to say that if Kris Engskov wants to read suggestions as well as comments, then here's mine: pay the back taxes you morally owe and start the long haul back to regaining your 'ethical company' image.
Small independent coffee shops do not have access to the tax loopholes that chains such as Starbucks, Costa and Cafe Nero do. Use your independent coffee shops and the UK benefits more.
The issue is not that you pay legally what you have to but you specifically structure your company arrangements so that you hide the massive profits and siphon them away and FIX your accounts so you don't have to pay tax. That is DISHONEST and not ETHICAL. Starbucks will pay for this in the UK, Like all US companies sticking your heads in the sand and saying nothing isn't going to help. you have been caught out and shamed. So stop all the accounts tricks and pay tax on the real profilts made.
Don't go to Costa. Don't go to Nero or any other rabble that suggest they are 'saving the world from mediocre coffee'. Rubbish.
FInd your nearest independent coffee place. These guys know what they are talking about, not just heating milk up and slopping it into a sugary, oversized cup - support them, tell your friends and help out a local business.
Leave the overpriced, shallow, immoral mega-companies to rot.
I'm surprised that so many people are shocked by a multinational companies conduct in the way they avoid tax, treat employees etc. it's what they do and it's why they're best avoided wherever possible. Small independent businesses are becoming a thing off the past while these giants suck the wealth out of countries economies the world over.
Here's the news, they won't change as long as people keep giving them money. They might try to limit the damage, as here, but they won't change. Greed.
I for shall be retiring my goldcard - you bill yourself as an ethical company supporting the geographies you are located in, and I have no problem with corporations making profits for their shareholders, but I cant abide liars
Mr Engskov,
You assure us that you pay the appropriate amount of taxes as per the letter of the law.
But in the companies act 2006 at 172 point 4 it requires that you must have regard:
"the impact on the community and the environment"
Do you sincerely believe that you have?
There are many that do not think so.
The comments above say it all.
Goodbye Starbucks.
For how long? Well, that is up to you.
Please consider my account closed. Put the £2.50 balance to the British Heart Foundation.
Will never buy from you again.
Having looked into the ways you have avoided tax such as borrowing money from other starbucks in other countries and paying high interest that you claim against your tax I find your statement above very disingenuous. I find your whole strategy "sneaky" and not the British way. I shall use a less sneaky approach in avoiding Starbucks and using Costa from now on.
Good Job
Tax buckers.
' pride ourselves on doing business to the highest ethical standards.'- Incorrect statement. Paying less than 1% in corporation tax, is not operating in an ethical way. I understand that you have complied with the law; but it doesn't make your choices ethical. Either pay tax at the correct amount (just like small businesses do), or loose me & many others as customers. I will not visit one of your stores, until this is corrected.
The danger Starbucks faces is that when people (even for a day) boycott and try coffee from somewhere else, preferably an indepedent shop, not Costa. They will realise what appalling coffee you serve up and never drink a cup of that forthy muck you call coffee again.
And it will darn well serve you right.
This is a statement about how many people you employ, not about how much tax you are paying!!!
Can you tell us how much corporation tax you paid over the past 3 years?
The answer is ZERO!
So stop thinking we're stupid, please.
Just cancelled my pre-paid card with you and requested a refund.
Will try the independent coffee shop next door. It's cheaper anyway and PAYS TAXES, like we all do!
Dear Kris Engskov,
You can dress it up all you like, the clear fact is that you do not pay corporation tax. You are already being boycotted, just make this easy for yourself, say you are sorry and start to pay taxes (as Costa does).
Hope you're having a quiet day.
Starbucks management team think that investing in expansion and employing people exempts them from paying taxes on profits. If that was the case all businesses that employ people would be exempt from corporation tax.
It comes down to their philosophy on taxation. Should wealth creating organisations contribute a proportion of their profits to helping the less well off and making society a better place? Or should their finance guys create structures that enable them to syphon off the cash?
I thought you were an ethical company, but it turns out you have employed clever lawyers and accountant to avoid paying your fair share of taxes. This at the same time as vital public services are being cut.
Unless you have a radical change at heart I will buy my coffee elsewhere, it's not like you don't have plenty of tax paying competitors who want my money.
http://www.youtube.com/watch?v=rDqatJPvOfk
I own a business in the UK that employees 18 people. We pay our employee tax, VAT and Corporation tax. So, we pay more than Starbucks do!!! It's bad how a company like this can pay no corporation tax.. In fact it's unfair. Perhaps I should setup a separate business in Guersey and cross charge expenses to it and pay no corporation tax and cream off the profit for myself. I don't do it because its immoral and I wouldn't live with myself. Starbucks is another heartless organisation...shame on them.
yeap massive negative for starbucks, I hate tax dodging like this just come back to Manchester from New York and made sure I did not go into a starbucks!! which was fairly difficult seeing though they are on every street corner, settled for dunkin donuts coffee !!
I normally avoid posting controversial comments on Facebook but did so today because I was so appalled at the news regarding your tax avoidance practices.
Of the many comments I received only 2 people defended SB - yep!, both were SB employees - loyal to the core but sadly misguided.
I see no one leaping to your defence in the comments above and I'm unsurprised, as it's your customers speaking here.
It takes a special kind of bad deed to rally the British public on the side of the taxman!
I pay my taxes, as do the people who work at Starbucks - the only ones who don't are the rent-seeking shareholders who use and abuse British infrastructure for their own selfish gain.
from the day i first heard about what taxes you avoid paying in the U.K i have stopped my daily visits to your stores & now use a local independent coffee house who actually pays tax on what they earn. i will not use a starbucks again until you do the same. shame on you!
Pay your taxes, criminals!!
Thieves !!!!!!!
Shitty coffee , always long queue , short staff.
I hate starbucks !!!!!!!!
Hi Folks - go to www.ukuncut.org.uk & look at the Dec 8th action list for your nearest SB protest
I see you have growth plans - presumably to make even more profits to squirrel away to the USA and avoid paying even more UK Tax.
BUT, why would any financially savvy company have expansion plans in a country where it was making a loss - weird!!!!
Despite the fact they have offered to pay a measly 10million, you have to ask if this is not a company that exploits everybody in the chain.
-Poverty stricken farmers
-Employees (cynically called 'partners')
-UK tax system
-Customers
Mr Schultz and his cronies are so ethical, global, Local they end up with 500Million and wages of anything between 5 and 8million. They seem to have no conscience.
Could that be a description of a sociopath?
OK credit where credit's due. To agree to pay tax appropriately is a step in the right direction and, for that, thank you. But HMRC (quoted on BBC news website) say that this is not a 'voluntary' tax. I consider your undertaking, welcome though it is, not to be the end of the story. What efforts are you going to make to redress the past deficiency, if not through back taxes? Is what you have done enough to tempt me back, away from the competitors I have been using lately...?
All I can do is praise Starbucks, they employ tens of thousands of people worldwide who have to pay tax on the money they earn so good on them using the available and perfectly legal processes to avoid any more being paid to our money wasting government. If all these protestors put their energy into working a bit harder and earning more money then they could make better lives for themselves and stop whinging about an incredibly successful company that should be congratulated on its success.
If you have a problem with companies offsetting business costs against potential tax then you need to have a go at the government, not the companies themselves. The government needs to tighten up tax legislation.
However the government needs to encourage businesses like Starbucks to grow and prosper so that they provide the employment opportunities that this country needs.
Personally I could never give up my caramel macchiato and luxury fruit toast, so I'm a big supporter of Starbucks!
The only thing I don't like is the poor rewards system which appears to me to be taking the mickey.
Any normal scheme would link rewards to the amount of money you spend, not the number of transactions you make with your card. Starbucks are banking on us not splitting up our transactions into individual product purchases. I'd love to make a point about this by taking up precious time in a long queue and splitting my large order into separate ones!
My final comment: why can't you get the classy US mugs in the UK? I've had to ask my son to buy a load and ship them back to me!
To be honest I don't blame them avoiding it. They haven't broken the law, they have avoided it legitimately. I'd have done the same, why pay something you can avoid paying?