UK

Starbucks Pays Corporation Tax For First Time Since 2008

23/06/2013 16:55 BST | Updated 23/06/2013 17:03 BST

Starbucks says it has paid UK corporation tax for the first time since 2008.

The coffee giant announced it had paid £5 million and will pay a further £5 million later this year, reports the BBC.

Starbucks is amongst a number of large multi-national companies that have come under fire in recent months for paying little or no UK tax despite making huge profits in Britain.

starbucks

Corporate tax avoidance is a hot issue with the public

Last year Starbucks said it would pay more tax after a boycott by customers.

UK managing director, Kris Engskov, said in an open letter that the firm had agreed to pay more than required by law, because "our customers clearly expect us to do more".

The company has 700 British outlets, but claims it has yet to turn a profit, resulting in it paying just £8.6m in corporation tax in 14 years.

A spokesperson said: "We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014."

Despite making a global net income of £253 million in 2012, financial records show its European arm actually made a loss of £39 million, reports the Daily Mail.

Other companies receiving criticism for their tax practices include Apple, Google, Facebook, Amazon and EBay.

Executives were grilled by the House of Commons Public Accounts Committee last year.

Just this week MPs called for an investigation into Google's "brazen" and "deeply unconvincing" explanation of its tax affairs.

Many companies base their financial headquarters in other countries in order to avoid paying UK corporation tax.

A report by MPs said: "Google defends its tax position by claiming that its sales of advertising space to UK clients take place in Ireland - an argument which we find deeply unconvincing on the basis of evidence that, despite sales being billed from Ireland, most sales revenue is generated by staff in the UK.

"It is quite clear to us that sales to UK clients are the primary purpose, responsibility and result of its UK operation, and that the processing of sales through Google Ireland has no purpose other than to avoid UK corporation tax.

"This elaborate corporate construct has damaged Google's reputation in the UK and undermined confidence in the effectiveness of HMRC."

Margaret Hodge, the head of the House of Commons Public Accounts Committee, said Google's practices were illustrative of a wider problem.

She said: "This committee has vigorously condemned the activities of the big UK accountancy firms in helping their clients find loopholes in legislation and establish highly artificial tax structures.

"These firms must recognise that the public mood on tax avoidance has changed and that the time has come for them to advise their clients responsibly."

The government has made tax avoidance a central part of their policy.

At last week's G8 summit, David Cameron announced he had secured an agreement with Britain's overseas territories to stamp down on the issue.