Starbucks Commitment to the UK | Starbucks Coffee Company | Hacker News Reader

Starbucks Commitment to the UK | Starbucks Coffee Company

starbucks.co.uk

The three things that stood out for me were:

1 Starbucks lumped National Insurance into their tax bill

2 They pay "branding rights" to the parent corporation

3 They make almost no profit in the UK

The first point is that NI is pretty much unavoidable anyway, so including it doesn't really make you look great. Only really low-level tax evaders try to get out of NI and PAYE.

The branding rights is an obvious avoidance measure. They don't have to pay this, since Starbucks UK is wholly-owned by their US headquarters (and if they're not, they may as well be).

The final point actually follows from the second: they don't report high profit because it's all syphoned off via branding rights. Do they seriously expect people to believe they operate in the UK purely out of the goodness of their hearts?

The film industry does something similar to what Starbucks is doing (and I am guessing many major brands). 'They pay "branding rights" to the parent corporation' This increases their overhead and is a major reason why most films are not "Profitable", but they are if you take out this brand licensing fee. Because many taxes and bonuses are based on profit companies can save huge amounts of money.

Also, does anyone know if the company that owns the Starbucks brand is located in the USA? My guess is that it is not due to tax reasons.

The Starbucks brand is controlled via a corporate entity in the Netherlands. This is pretty common; IIRC Ikea does the same thing.

I don't know about Starbucks, but I know Google does the same thing and pays branding rights to their Irish HQ.

Unfortunately, I can't find the article that details it. If I can, I'll post it.

> The first point is that NI is pretty much unavoidable anyway, so including it doesn't really make you look great. Only really low-level tax evaders try to get out of NI and PAYE.

IANATL but do Starbucks even have any PAYE or NI tax to pay? Isn't it their employees that pay that? Just because Starbucks happen to take the money off of your pay cheque for you doesn't mean that it's not your tax liability that's being paid for.

Not having your employees systematically avoiding tax (e.g. like what happens at some levels in the civil service) is great and all but it's not like Starbucks are out there preaching to their employees about how awesome it is to be a tax payer.

In the UK, PAYE and NI are deducted from your headline wage, but then the employer has to pay an additional NI contribution on top of that, which is what Starbucks are presumably referring to. Employers aren't allowed to deduct this from staff wages, so instead they simply pay staff a lower wage to start with.

Employers pay contributions to the employee's NI. I don't know the exact ratios, but it's non-trivial.

I threw PAYE in there, since NI and PAYE tend to go hand-in-hand. Looking at it again, I probably muddied my explanation somewhat.

Starbucks aren't preaching to their employees, but they are trying to claim moral credit for paying a tax that's not worth their time to get out of paying.

People stumbling upon this: please make sure you read the comments on that blog post.

Apparently Starbucks changed the original writing; with huge semantic differences. It seems they divulged something they shouldn't have…

They didn't 'divulge something they shouldn't have' what they did was say that in the £160m in taxes they are saying they paid they include PAYE. PAYE is the portion of an employee's salary that is automatically taken by the taxman; so Starbucks were saying they paid taxes that in fact their employees paid.

It would be interesting to know what other taxes they include in that figure (such as VAT which a company would merely collect from customers and pass onto the government).

"so Starbucks were saying they paid taxes that in fact their employees paid."

That's what I meant by divulging something they shouldn't have. Them considering taxes their employees paid as taxes they (Starbucks) paid is obviously something that won't be received favorably.

> Following a number of stories in the media over the last day about Starbucks and the amount of tax we pay each year, I believe it’s important that we share the facts with you on this important issue.

I know that anything they say after this is going to be sleazy lies and distortions. It is baffling to me how they think they can churn out vapid puffery and expect people to believe it.

The comments on the blog are delicious, and I really hope parliamentary researchers are reading and passing information onto the select committee.

It's simple really... vote with your wallet and don't buy Starbucks coffee

vote with your wallet and your taste buds and your health. All three suffer when you buy Starbucks coffee.

Ha ha absolute meltdown in the comments. Methinks this won't go well for Starbucks.

brilliant, one blog post not to have comments on if ever there was.

You'd have thought for all that effort they could have made some decent coffee.

I prefer this article: http://news.ycombinator.com/item?id=4777423 (Starbucks, Google and Amazon: the tax crash of Monday afternoon)

I'm really curious. Did anybody here read that and think that it in anyway painted Starbucks in a better light, even if taken with a pinch of salt?

A lot of press-releases are often aimed at investors or the business markets etc., which is why they sometimes appear strange to the general public. But even (perhaps especially) those types of audience are even more able to see through this kind of BS and understand how the "system" works, so I'm really not sure why they released it at all. Any thoughts?

I think it's aimed at consumers, trying to patch up their public relations. Taken at face value (and overlooking the comments), it does sound vaguely comforting - they quote a big number for taxes paid, protest that they're not making much money, and talk about the local things they source (so caring of them, not to fly sandwiches in from China!). If you were unsure, but kind of liked going to Starbucks, I imagine you could well go away thinking that maybe the allegations were overblown.

Maybe. Most customers having heard the allegations though I would have thought that it would take a lot more than this to pull the wool over their eyes. Maybe I misjudge some of their customers though...

http://pastebin.com/UGdPnaDb mirror of the comments

Reply on news.ycombinator.com