Photo: AP Images
Starbucks has been caught telling investors it was profitable in the UK, while reporting losses to the government, according to a special report by Reuters’ Tom Bergin.This contradiction points to creative accounting, which may have helped the company get away with paying almost no UK income tax.
More from Bergin:
Over the past three years, Starbucks has reported no profit, and paid no income tax, on sales of 1.2 billion pounds in the UK. McDonald’s, by comparison, had a tax bill of over 80 million pounds on 3.6 billion pounds of UK sales. Kentucky Fried Chicken, part of Yum Brands Inc., the no. 3 global restaurant or cafe chain by market capitalisation, incurred taxes of 36 million pounds on 1.1 billion pounds in UK sales, according to the accounts of their UK units.
“Yet transcripts of investor and analyst calls over 12 years show Starbucks officials regularly talked about the UK business as ‘profitable,'” Bergin writes.
The company defended itself, saying that “we seek to be good taxpayers and to pay our fair share of taxes … We don’t write this tax code; we are obligated to comply with it. And we do.”
Bergin emphasises that Starbucks didn’t break any laws and shouldn’t be prosecuted. The real question is whether the coffee giant’s actions were ethical.
Business Insider Emails & Alerts
Site highlights each day to your inbox.