Starbucks pays just £5m in UK corporation tax on £95m gross profit | Starbucks

Starbucks paid just £5.4m in UK corporation tax last year despite grossing a gross profit of £95m.

The company, which has faced years of heavy criticism for paying very little tax in the UK, paid out £26.5million in royalties, almost five times more than the UK tax that she paid, according to accounts filed at Companies House.

The royalty payments helped Starbucks, which is run by billionaire Howard Schultz, to an overall profit of $4.9bn (£3.7bn) over the same period.

The UK division achieved sales of £328million across its 1,000 UK stores in the year to October 3, 2021, compared to £243million the previous year when stores were temporarily closed during the pandemic lockdown.

Starbucks Coffee Company (UK) made a ‘gross profit’ of £95.1million for the year, but after swallowing ‘administrative expenses’ of £78million its pre-tax profit was reduced to £13.3 million, on which he paid £5.4 million in tax. . A year earlier, the company received tax credits of £4.4 million after posting a pre-tax loss of £40.9 million.

Starbucks said administrative costs included occupancy costs such as business rates, service charges, maintenance and utilities for stores and central costs necessary to run the UK business, including IT, marketing and head office costs.

The UK arm of Starbucks made cumulative after-tax losses of more than £100million between 2010 and 2021, according to an analysis of its accounts by the Guardian. It has reported a profit in just five of 12 years, but tax experts say it’s unclear whether they’re an accurate reflection of the business.

Paul Monaghan, chief executive of the Fair Tax Foundation, said: ‘Starbucks’ main UK subsidiary has maintained its tradition of paying little UK corporation tax, and this was again due to the payment of royalties and high license fees to entities. the business group.

“The numbers now have some predictability.”

In 2012 it was revealed that Starbucks had only paid £8.6 million in tax on £3 billion in UK sales since 1998 when it launched its first coffee shop in the UK. United.

The company declined to comment on royalty payments or the reasons for its very low pre-tax profits in the UK.

Separate accounts show Starbucks’ UK-based European operations paid just $13m in tax last year, while paying the coffee giant’s Seattle parent company a $164m dividend of dollars.

Starbucks Europe, Middle East and Africa (EMEA) collected royalty payments of $237 million in the year to October 3. He made a pre-tax profit of $190 million and paid $13.1 million in taxes.

The company said the tax payment was low because “this dividend income has already been taxed in other jurisdictions before it was recognized for accounting purposes as profit in Starbucks EMEA Limited. As the income has already been taxed, it is exempt from further UK corporation tax.

Starbucks EMEA, which collects royalties from 43 countries including the UK, has accumulated shareholder funds to over $2 billion.

Starbucks Corporation, the US parent company, earned an “operating income” profit of $4.87 billion in the year ending October 3, 2021, on sales of $29 billion.

Shultz, who transformed Starbucks from an 11-store Seattle chain he took over in 1986 into a global coffee empire, announced earlier this month that he was returning as interim chief executive. Shultz, who has amassed an estimated fortune of $4 billion, joins for his third term as chief executive following the retirement of Kevin Johnson.

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