Starbucks' U.K. Tax Under Scrutiny

Starbucks (Nasdaq: SBUX  ) is the latest international company under fire for the amount of taxes it pays on revenues generated in the U.K. The concerns involve the practice of companies in England negotiating the payment of royalty fees for brand usage to subsidiaries, in exchange for significant tax deductions.

In England, the practice of deducting royalty payments to limit a company's tax burden is commonplace. However, parliament's Public Affairs Committee is looking at the tax avoidance issue, Reuters reports. In parliament on Wednesday, Prime Minister David Cameron addressed questions regarding tax practices, saying he was unhappy with the level of tax avoidance, according to Reuters.

New concerns surrounding tax payments in England come on the heels of recent reports from Reuters showing that Starbucks has paid a total of 8.6 million pounds in income tax since 1998, on revenues of 3 billion pounds.

In a posting on the Starbucks website Tuesday, CEO Howard Schultz said Starbucks has never avoided paying taxes in the U.K. Over the past three years, the company has paid more than 160 million pounds in various taxes, including National Insurance contributions, VAT and business rates, Schultz wrote. "Despite what has been implied, Starbucks European structure has no impact on our taxable profit in the UK," Schultz wrote.

Other multinationals, including Facebook   (Nasdaq: FB  ) , Goldman Sachs (NYSE: GS  ) , and Vodafone (Nasdaq: VOD  ) , have come under fire for what are perceived to be inordinately small tax bills.

 

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