NPR Story
6:00 am
Fri October 19, 2012

Starbucks Says It Complies With U.K. Tax Laws

Originally published on Tue October 23, 2012 1:03 pm

Transcript

RENEE MONTAGNE, HOST:

And in Britain this week, eyebrows were raised with the revelation that Starbucks has paid almost no corporate tax on its operations in the UK. Starbucks insists it's done nothing wrong.

Vicki Barker reports from London.

(SOUNDBITE OF STARBUCKS AD)

UNIDENTIFIED MAN: That's why at Starbucks we've decided to do things differently.

VICKI BARKER, BYLINE: Since that green mermaid logo first washed up on these shores in 1998, Starbucks-UK has racked up more than four and a half billion dollars in sales, here.

(SOUNDBITE OF STARBUCKS AD)

UNIDENTIFIED MAN: We're Starbucks. Nice to meet ya.

BARKER: Yet it's paid only $13 million dollars in UK corporate income tax - less than three-tenths of a percent of that total. And it's paid nothing at all in the past three years. For a simple reason: Starbucks says it hasn't made any profit to be taxed.

Sitting outside a busy Starbucks in Hammersmith, West London, customer Derek de Costa is skeptical.

DEREK DE COSTA: I don't believe the fact that they're not making a profit. It's filled, it's always - there's always a queue. I think they should be paying.

BARKER: But tax expert John Whiting says Starbucks is paying, in other ways. It's created jobs, five thousand jobs, Starbucks says. And it pays British social security and sales tax.

JOHN WHITING: The company may not be paying much corporation tax, but the country, the UK, will still be making a good profit out of them.

BARKER: Starbucks insists it's in full compliance with UK law. Analysts note international companies like Starbucks are able to essentially out-source profits to countries with lower tax rates - all perfectly legal. And popular: Amazon, eBay and Facebook have all been revealed as paying minimal corporate tax on their UK operations.

For NPR News, I'm Vicki Barker in London. Transcript provided by NPR, Copyright National Public Radio.