Starbucks pays UK corporation tax for first time since 2009

Image caption,
The move follows protests against large corporations' tax affairs

Coffee giant Starbucks has paid £5m in UK corporation tax - its first such tax payment since 2009 - the company has announced.

A company spokeswoman said it had listened to its customers and would pay another £5m later this year.

The move follows pressure from politicians and campaigners, and an agreement by world leaders last week to clamp down on corporate tax avoidance.

Starbucks has only reported taxable profit once in 15 years in the UK.

It announced late last year it would pay more corporation tax after a public outcry and an investigation by MPs.

"We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014," a Starbucks spokeswoman said.

Close some stores

Starbucks reportedly paid just £8.6m in corporation tax in the UK over 14 years and nothing in the last four years - despite sales of £400m last year.

As part of its tax affairs, the firm transferred some money to a Dutch sister company in royalty payments, bought coffee beans from Switzerland and paid high interest rates to borrow from other parts of the business.

During an investigation into corporate tax avoidance, the company's global chief financial officer told a committee of MPs last year that the tax deal struck with Dutch authorities was "an attractive reason" for basing operations there.

A spokeswoman said the company was now "undertaking measures to make Starbucks profitable in the UK".

She added unprofitable stores would be closed or relocated and there would be a "greater reliance on franchised and licensed stores".

The Public Accounts Committee of MPs said last year it "found it difficult to believe" Starbucks "was trading with apparent losses for nearly every year of its operation in the UK".

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