Starbucks pays more tax to build trust

Starbucks has launched a campaign to tell customers that it has agreed to pay more than £20m in UK corporation tax in an effort to rebuild trust with consumers following public outcry over its tax practices.

UKUncut targets Starbucks
UKUncut will still target Starbucks despite increased tax payment.

The US coffee chain maintains that it has yet to become profitable in the UK since launching here 14 years ago, but says that in light of customer dissatisfaction over current tax arrangements, it will increase the corporation tax it pays “above what is currently required by law”.

In an open letter to customers in today’s (7 December) papers Starbucks says: “acting responsibly makes good business sense”.

Starbucks will no longer claim tax deductions for royalties and intercompany charges, and will pay a “significant” amount of tax in the UK in 2013 and 2014 whether it makes a profit or not.

Kris Engskov, Starbucks UK managing director, says: “The commitments Starbucks is making today are intended to begin a process of enhancing trust with customers and the communities that we have been honoured to serve in the past 14 years.

“We know we are not perfect. But we have listened over the past few months and are committed to the UK for the long term. We hope that over time, through our actions and our contribution, you will give us an opportunity to build on your trust and custom.”

Starbucks has no legal requirement to increase the tax it pays in the UK and currently operates within the legal framework. It has met with a customer backlash since details of its minimal UK tax payments were made public and many claim to have been boycotting the chain.

The brand’s Buzz score on YouGov’s Brand Index has plummeted to -23 down from +0.5 in the middle of October.

Lobbying group UK Uncut still plans to host demonstrations in Starbucks stores this weekend as part of its Refuge from The Cuts campaign. It is targeting what it calls “tax-dodging” companies and campaign the Government to recoup lost tax to prevent benefits, healthcare, Sure Start centres, childcare, rape and domestic abuse services being cut.

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