Starbucks expected to announce on Dec. 6 that it plans to pay more corporation tax in UK in 2012 and in coming years, following reports of coffee chain paying £8.6M in taxes since 1998 despite reporting £3B in UK sales

Nevin Barich

LONDON , December 5, 2012 (The Guardian) – Starbucks is attempting to defuse the mounting row about the amount of tax it pays in the UK by pledging to pay more corporation tax in the coming years.

The US company is preparing to make an announcement on Thursday – the day after the chancellor's autumn statement, which is expected to focus on ways to bring in more tax from major multinationals who have found legitimate ways to avoid paying huge amounts of corporation tax.

The details of Starbucks' announcement are still being thrashed out, but the company, which runs 735 coffee shops in Britain, is likely to pledge to pay millions of pounds of corporation tax this year.

A spokeswoman for Starbucks said: "We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HM Revenue & Customs for some time and is also in talks with the Treasury. We will release more details tomorrow."

The potential agreement comes during a week in which the coffee company was slated by the public accounts committee of MPs, which had summoned Starbucks along with other low tax payers such as Amazon to explain the amount they paid.

"The committee was not convinced by Starbucks' explanation for not paying tax – that it had been making trading losses in almost every year it had been in the UK.

"Starbucks told us that it has made a loss for 14 of the 15 years it has been operating in the UK, but in 2006 it made a small profit. We found it difficult to believe that a commercial company with a 31% market share by turnover, with a responsibility to its shareholders and investors to make a decent return, was trading with apparent losses for nearly every year of its operation in the UK," the committee said.

Amid calls for a consumer boycott of Starbucks, employees have been forced to sign revised employment terms, including the axing of 30-minute lunch breaks.

The tax row erupted after research by Reuters found that Starbucks had paid just £8.6m in taxes despite reporting £3bn in UK sales since 1998, when it opened in the UK.

The Starbucks spokeswoman added: "Starbucks is committed to the UK for the long term and we have invested more than £200m in our UK business over the past 12 years. Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked."

(c) 2012 Guardian Newspapers Limited.

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