Hit or miss? Starbucks delivers on corporation tax promise after backlash

On Sunday, Starbucks paid £5m in corporation tax for the first six months of 2013, despite declaring its UK arm was expected to make an annual loss of £30m (the tax is levied on profits).

Taxing times: Starbucks pays out
Taxing times: Starbucks pays out

The chain said it ‘listened to our customers in December’ and decided that ‘our customers should not have to wait for us to become profitable before we started paying UK corporation tax’, referring to last year’s consumer backlash and boycott. 

How I see it

Andrew Escott, managing director, corporate affairs, Cohn & Wolfe

Starbucks’ handling of the news is a hit because it was generally well received by a cross-section of the UK media, even those who were critical of the brand in the past.

It received appropriate prominence, had a clear message delivery and received coverage with less of a focus on its detractors.

Starbucks now needs to be careful how it handles future announcements on these ‘voluntary’ tax payments and about how it promotes the new Oxford Economics report, which shows its ‘wider’ contribution to the UK economy.

It should also concentrate on developing a long-term sustainable arrangement with the UK tax authorities, where all parties are agreed on what Starbucks should pay in this country as part of its legal obligations, rather than what it decides it is willing to pay. 

 

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