Starbucks branches hit by tax protests

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Coffee chain Starbucks (NasdaqGS: SBUX - news) was on Saturday hit by protests at branches across the country over its tax arrangements, despite announcing changes to its payments.

The US-owned giant said on Thursday that it expects to pay around £10m in UK corporation tax for each of the next two years , following the revelation that it paid just £8.6m in 14 years of trading in Britain despite enjoying sales of £3bn.

Activist group UK Uncut carried out more than 40 demonstrations across the country, "transforming" Starbucks stores into refuges, creches and homeless shelters.

The anti-cuts direct action organisation said the number of protests had increased since Starbucks made its announcement.

One store in Vigo Street, central London, was occupied by protesters at 12pm and then temporarily closed.

Dozens of activists chanted and waved placards and banners outside, shutting off the street to traffic under the gaze of the police.

The store was transformed into a domestic violence refuge as the protest sought to highlight the "disproportionate" effect that the coalition's cuts to the public sector are having on women.

UK Uncut said it wanted to highlight the "disproportionate" impact of the Government's spending cuts on women.

Sarah Greene, a UK Uncut activist, said: "The Government could easily bring in billions that could fund vital services by clamping down."

The managing director of Starbucks UK, Kris Engskov, on Thursday made an unprecedented offer to pay an extra £10m to HMRC each year, "until we are paying corporation tax at a material rate".

Up until now, Starbucks has insisted that its UK business does not make a profit because of the high rents it pays for its shops, and therefore has paid little corporation tax.

The coffee chain also uses a number of perfectly legal mechanisms to further reduce the tax it pays, including handing a 4.7pc licensing fee to a separate arm of Starbucks in the Netherlands for image rights. It also buys its coffee from a Swiss division of Starbucks which charges a 20pc premium on the product.