Starbucks CEO says in talks on UK tax payment

Thu Dec 6, 2012 4:47am IST

Howard Schultz CEO of Starbucks poses during an interview with Reuters in Shanghai April 19, 2012. REUTERS/Carlos Barria

Howard Schultz CEO of Starbucks poses during an interview with Reuters in Shanghai April 19, 2012.

Credit: Reuters/Carlos Barria

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(Reuters) - Starbucks Corp (SBUX.O) Chief Executive Howard Schultz on Wednesday said the coffee chain is in talks about paying income taxes in the UK, despite the fact the company has not made a profit in that market for many years.

"We are engaged in discussions to make a contribution - despite the fact that we have not made a profit - that would legally put us in a position to pay income taxes," Schultz said in an interview with Reuters.

The Independent newspaper on Wednesday reported that Starbucks is close to a deal with HM Revenue & Customs that could see it pay between 5 million and 6 million pounds in corporate tax this year.

Starbucks repeatedly has said that it has been in compliance with UK tax laws.

"We've always played by the rules. This is not about the rules. This is about what is the right thing to try and do given the circumstances within Europe," Schultz told Reuters after the company investor meeting in New York City.

Starbucks is expected to make an announcement on the agreement on Thursday.

A Reuters examination of Starbucks accounts published in October showed the company had reported 13 years of losses at its UK unit, even as it told investors the operation was profitable and among the best performing of its overseas markets.

The chain's UK unit paid no corporation tax - a tax on a company's income - in the last three years for which figures are available and has only paid 8.6 million pounds income tax since 1998, despite racking up 3 billion pounds of sales.

The revelations led to calls for a boycott of the store and protests at its branches.

With governments across Europe running big budget deficits due to the financial crisis and global economic slowdown, tax avoidance has moved to the top of the political agenda.

Tax campaigners and groups opposed to austerity measures have pushed the UK government to lean more heavily on big businesses to close the budget gap.

Starbucks Chief Financial Officer Troy Alstead recently gave evidence to a parliamentary committee on the issue and was joined by representatives from Google Inc (GOOG.O) and Inc (AMZN.O), which also pay little in taxes in Britain despite reaping substantial sales.

Google declined comment and Amazon did not immediately respond to requests for comment.

(Additional reporting by Alexei Oreskovic and Alistair Barr in San Francisco; Editing by G Crosse, Bernard Orr)

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