Starbucks has faced scrutiny for what UK lawmakers call “outrageous” and “immoral” tax dodging, along with Amazon and Google. Starbucks’ average tax rate on overseas income is just 13 percent, and it has paid the UK just $13.8 million in the last 14 years.
On Thursday, Starbucks promised to pay $16 million more to the UK over the next two years, after coming under fire for its complicated use of tax deductions and inter-company payments:
“Today, I am announcing changes which will result in Starbucks paying higher corporation tax in the UK — above what is currently required by law,” [Managing Director Of Starbucks UK Kris] Engskov said in the speech to the London Chamber of Commerce […]
“In addition, we are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years,” Engskov said.
Legal tax dodging is a common affliction worldwide, as major companies avoid taxes everywhere by shifting profits to tax havens. Starbucks’ overseas tax rate of 13 percent, “one of the lowest in the consumers goods sector,” is approximately what the average corporation paid in federal U.S. income tax between 2000-2005. The effective federal rate fell to a 40-year low last year.
Compared to the UK, the U.S. collects even less is taxes from corporations: