Strarbucks and Britain: a new scandal with multinational company

10.12.2012

Most recently, a new scandal erupted between the authorities of the United Kingdom and one of the largest multinational companies - American network cafes Starbucks. The scandal was triggered by allegations that the coffee chain does not pay income tax in the UK for 3 years. Authorized UK authorities note that, Starbucks paid only 8.6 million pounds in taxes for 3 years on revenue of 3 billion pounds. In response to this guide Starbucks, so as not to stir up a scandal on and does not get to court, promised to pay into the treasury of the UK 10 million pounds, or 20 million pounds over two years.

Starbucks became the first multinational company that has responded to public criticism and political pressure. Starbucks decision could affect other corporations, including Amazon and Google, and changing their tax policies.

However, many experts noted that the company did not violate the law, acted legally, but applied literate ways to minimize tax, for example, transfer royalty in a jurisdiction with a lower tax rate than the Foggy Albion, well organized supply chain of coffee beans in England, and so etc.

On the basis of: http://www.guardian.co.uk/

Expert’s opinion

"I want to highlight three key points which to draw your attention to:

1. Starbucks organized properly the supply of coffee beans in the UK.

What does this mean to us in clear terms? Only work well in the world-wide pattern of "reseller" and "transfer pricing"!

2. Starbucks transferred royalty in a jurisdiction with a lower tax rate.

This means that the use of trademarks, patents and other intangible assets in order to increase the gross expenses of the enterprise is an effective tool for tax planning!

3. The most important thing is the phrase: "... The decision Starbucks could affect other corporations ...... and change their tax policy ..."!

Change “them” that is the tax policy of the companies, not countries!

Moving from state regulation to self-regulation by companies is a very important sign!

World Future tax policy is alignment of tax rates to a level acceptable to the freedom of enterprise and rational and reasonable budget expenditures. "

Yaroslav Lomakin ( Managing partner of “Honest&Bright” company.)