06/12/2012 08:10 GMT | Updated 07/12/2012 09:38 GMT

Starbucks To Pay £10m Corporation Tax For Next Two Years

Starbucks has said it will pay "somewhere in the range of £10 million" in UK corporation tax for each of the next two years.

The US coffee firm - valued at £25 billion - has generated more than £3 billion of sales in the UK since 1998 but it emerged in October it has paid less than 1% in corporation tax.

Starbucks has reportedly paid just £8.6 million in corporation tax in the UK in the last 14 years. The revelations prompted widespread anger amongst customers, with many threatening to buy their hot drinks elsewhere.


Starbucks has said they will pay somewhere in the range of £10m each year

Starbucks UK managing director Kris Engskov told the London Chamber of Commerce that changes to its tax arrangements will see the firm pay above what is required by law.

Mr Engskov said: "With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more."

The Sunday Times reported earlier this week that the coffee giant was preparing to pay more into Britain's coffers following a customer boycott, in what was hailed by many as signalling 'people power.'

Its nearest UK rival, Costa, owned by Whitbread, recorded £377 million sales last year, compared to Starbucks' £398 million, but its tax bill came to £15 million, or 31% of its profits.

A four-month investigation by news agency Reuters discovered that Starbucks was able to cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand.

This means Starbucks UK is effectively making a loss and therefore does not have to pay any corporation tax. As a result, it has not broken any law.

The most recent results, posted for 2011, show Starbucks UK recorded a loss of £33 million.