Yahoo Finance Starbucks Tax Bill Falls As Profits Rise
Starbucks (Swiss: SBUX.SW - news) paid less corporation tax in the UK this year - in a period when its profits rose to a record level.
The US-owned coffee chain - whose tax affairs have proved controversial in the past - contributed £8.1m to the Exchequer for the year to 27 September, down from £11.4m the year before.
But the figure, revealed in the firm's latest annual results, was still well ahead of many previous years.
Starbucks came under intense pressure after research in 2012 showed it had paid just £8.6m in tax on £3bn in sales over the first 14 years since it launched in the UK in 1998. MPs described its corporate structures as "immoral".
The public outcry prompted the firm to say that it would forgo deductions that it would have been allowed to make from its tax bill.
Starbucks said that the corporation tax payment for the year to September 2014 was inflated because it included the final portion of this commitment.
It (Other OTC: ITGL - news) meant that this year the tax bill was 29% lower even though its pre-tax profits, at £34.2m, were 17 times higher than they were a year before, at £1.99m.
Profits rose as it closed unprofitable shops and reshaped its store portfolio.
Kris Engskov, Starbucks president for Europe, the Middle East and Africa, said: "Profits are up by more than £30m as we have invested in the store experience while managing our costs."
The company said it had seen UK like-for-like sales growth of 3.8% while its profit margin of 6.9% - up from 0.5% the year before - was the highest since its UK launch.
It added that the year saw the opening of four new company-owned stores and 50 new franchised or licensed sites, with 800 new UK jobs created. Starbucks has more than 800 UK stores.
A growing number of US and other international firms are being investigated over their tax affairs by the European Commission (EC).
In October, Starbucks and Italian carmaker Fiat (Hanover: FIA1.HA - news) were ordered to repay up to €30m (£22m) after the EC found that deals struck between the coffee chain in the Netherlands and the car maker in Luxembourg effectively amounted to illegal state subsidies that must be repaid.
