Published on 23 Jun 2013 Sections , , ,

Starbucks pays UK corporation tax for first time since 2009

Coffee shop chain Starbucks pays £5m in corporation tax – its first such payment since 2009, the company confirms.

The payment is for the first six months of 2013 despite the coffee chain making an expected annual loss of £30m in the UK.

A further payment of £5m will be made in the second half of the year.

The news of the tax payment aims to show that the American company has responded to the criticism it received last year for making licensing and supply agreements with the Dutch and Swiss divisions of the business to avoid paying tax in the UK.

In a statement, Starbucks said: “Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax.

“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.

‘UK arm is loss-making’

“We have now paid £5m and will pay the remaining £5m later this year.”

Despite high levels of sales Starbucks insists that the UK operation is loss-making with the chief executive of Starbucks Europe, Kris Engskov, closing a number of stores to try and turn around the UK business.

Between 25 and 30 branches in “less lucrative locations” are expected to close this year, with 30 stores closed in 2012 and relocated to less expensive sites.

Engskov has said he hopes to return the business to profitability within the next three to five years, claiming that the last time the business turned a profit in the UK was five years ago in 2009, when it last paid tax.

Google and Amazon have also faced criticism for the low amounts of tax they pay in the UK.

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