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Starbucks pays first U.K. corporation tax since 2008

Posting in Government

U.S.-based coffee giant Starbucks says that it has paid £5 million to the British government in corporation tax.

Following public anger at the revelation that Amazon, Starbucks and tech giant Apple pay little or no corporation tax into British coffers, the company released a statement Sunday, commenting:

"Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying U.K. corporation tax. We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10 million in corporation tax this year and a further £10 million in 2014.

We have now paid £5 million and will pay the remaining £5 million later this year."

Starbucks maintains that operations in the United Kingdom remain unprofitable, and that a number of outlets are at risk of closure.

"We are also undertaking measures to make Starbucks profitable in the U.K., such as relocating unprofitable stores to more cost effective locations, closing them where that is not possible and placing greater reliance on franchised and licensed stores."

Current tax rates in the U.K. stand at 23 percent, but the coffee giant has used subsidiaries and tax avoidance methods -- rather than evasion, which is illegal -- to pay no tax from 2009 to 2012.

The exposure of Starbucks' practices resulted in a loss of customers and a number of demonstrations outside U.K. outlets.

Margaret Hodge, MP and chair of parliament's public accounts committee, believes that the system is due for an overhaul. Instead of companies being able to "pick and choose how much tax they pay," Hodge says that "we need a system which ensures that everybody pays a fair share of tax on the profits they gain from the economic activity they undertake."

Read More: Huffington Post

Image credit: Flickr

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— By on June 23, 2013, 11:14 PM PST

Charlie Osborne

Contributing Editor

Charlie Osborne is a freelance journalist and photographer based in London. In addition to SmartPlanet, she also writes for business technology website ZDNet and consumer technology site CNET. She holds a degree in medical anthropology from the University of Kent. Follow her on Twitter. Disclosure