Latest news with #PaulMonaghan
The Guardian
15-04-2025
- Business
- The Guardian
Starbucks's UK retail business paid no corporation tax last year
Starbucks's UK retail business paid no corporation tax for last year as it dived to a £35m loss after paying £40m in royalty and licence fees to its parent company. The US-owned coffee chain said it made the payments despite sales declining 4% to £525.6m in the year to 29 September 2024, amid what it called a 'challenging economic climate' and a consumer boycott linked to the Gaza conflict. Sales fell even though it opened 100 new British stores during the period. The previous year it had made a £16.9m pre-tax profit. The company's trading was hit after it was named on a list of companies to boycott for its perceived support for, investment in, or links to, Israel. It has denied having any political agenda, saying: 'We do not use our profits to fund any government or military operations anywhere.' In spite of sliding sales, Starbucks's UK retail arm paid out just over £40m in royalty and licence fees to its parent company – a similar figure to the prior year – tipping it into loss so that it paid no corporation tax. It did hand HM Revenue and Customs almost £1m in deferred payments and adjustments related to prior years – including £455,000 of corporation tax. That came after it was previously criticised by fair tax campaigners for paying a 'derisorily low' £7.2m in UK corporation tax for 2023. Paul Monaghan, the chief executive of the Fair Tax Foundation, described the latest catch-up payments as 'paltry', adding that the latest Starbucks UK accounts reflected a long history of paying little or no corporate income tax with 'surpluses invariably wiped out by substantial royalty payments to other parts of the business'. Starbucks paid just £8.6m in the first 14 years after its 1998 debut in the UK, with none paid in several consecutive years, despite £3bn worth of sales during that time. A Starbucks spokesperson said:'Starbucks is in full compliance with tax laws around the world, with an effective global tax rate of over 24% in 2024, which is in excess of the 15% minimum corporation tax discussed by the Organisation for Economic Co-operation and Development.' The number of transactions at Starbucks's 1,240 UK outlets, which include 378 run directly by the company as well as hundreds operated by franchisees, fell back as it raise prices by up to 4% on its drinks amid inflation on coffee beans, cocoa and milk. The price of a latte or cappuccino hit £4.25 in March last year with more elaborate drinks, such as a white chocolate mocha, hitting £5.40. This month, prices have risen again with a cappuccino now costing £4.70 and a caramel macchiato priced at £6.10. As the company fell into the red, Starbucks's parent company pumped £50m into its UK division last year – via a revolving credit facility and a capital injection. Late last year the parent group committed to support its UK arm further financially if necessary and extended the payback period for a £20m loan, on which it is charging its UK business more than 5% interest, until December this year. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion 'Persistent inflation and higher interest rates left consumers with less disposable income, resulting in many adjusting usual spending habits; leading to a reduction in year-on-year transactions,' Starbucks said in accounts filed at Companies House this week. 'This was coupled with an increasingly competitive environment in key cities as new entrants to the market invested in new stores. Misperceptions about the brand relating to events in the Middle East also affected footfall in some locations in the first half of the year.' The company, which was founded in Seattle in 1971 and is now the world's biggest coffee shop operator, said there was also increasing competition for the best sites in city centres and drive-thrus, despite coffee shops coming under pressure from cost inflation and tightened consumer spending. While Starbucks's UK business has struggled, cheaper rival Greggs has been rapidly expanding, while British chain Caffè Nero increased sales globally by 15% in the year to May 2024 to almost £520m, including 10% growth in the UK. However, Caffè Nero also fell into the red, recording a £34.4m annual loss. Starbucks has said it wants to open 80 more stores this year.
The Guardian
14-04-2025
- Business
- The Guardian
‘Silicon Six' accused of avoiding almost $278bn in US corporation taxes over 10 years
The big American tech firms known as the 'Silicon Six' have been accused of paying almost $278bn (£211bn) less corporate income tax in the past decade compared with the statutory rate for US companies making the same profits. Amazon, Meta, Alphabet, Netflix, Apple and Microsoft generated $11tn of revenue and $2.5tn of profits over the past 10 years. Yet they paid an average 18.8% in combined national and federal corporation taxes, compared with an average 29.7% in the US, according to the Fair Tax Foundation (FTF), which said the Silicon Six had 'hardwired' tax avoidance into their business models. Analysis by the not-for-profit organisation found that if one-off repatriation tax payments in the US connected to historical tax avoidance were excluded, the average corporate income tax contribution of the six firms fell to 16.1% over the past decade. The companies had also inflated their stated tax payments by $82bn over the same period by including contingencies for tax they did not expect to pay, the report claimed. Paul Monaghan, the chief executive of the FTF, said: 'Our analysis would indicate that tax avoidance continues to be hardwired into corporate structures. The Silicon Six's corporate income tax contributions are, in percentage terms, way below what sectors such as banking and energy are paying in many parts of the world.' Monaghan pointed to 'aggressive tax practices' such as the contingency tax positions, while the companies also exerted 'enormous political influence as well as economic power', spending millions of dollars on lobbying governments. The report comes as the US tech companies' influence has been highlighted by the presence of their bosses including Amazon's Jeff Bezos, Apple's Tim Cook and Meta's Mark Zuckerberg at Donald Trump's second inauguration. A significant tax cut for such companies has reportedly been at the heart of discussions with the UK in its attempts to secure lower tariffs on its products exported to the US. Monaghan said that much of the Silicon Six's overseas revenue was subject to low-level rates of corporate income tax in the US via a tax break for foreign-derived intangible income. FTF said overseas sales were also subject to lower rates of income tax because of a combination of lower profit margins and booking profits in low-tax jurisdictions. Netflix had the lowest rate of tax actually paid compared with profit booked, at 14.7%, while Microsoft paid 20.4%. FTF said Amazon had the worst tax conduct based on the factors such as the total amount of tax paid and 'obvious profit shifting' – such as booking a sizeable portion of its UK income in low-tax Luxembourg. However, Amazon's corporate tax rate was 19.6%, well ahead of Netflix, Meta (15.4%) and Apple (18.4%). A spokesperson for Amazon said its UK retail revenues, associated expenses, profits and taxes were recorded in the UK, and reported and paid directly to HM Revenue and Customs. They said: 'Governments write the tax laws and Amazon is doing the very thing these laws encourage companies to do – paying all taxes due while also investing billions in creating jobs and infrastructure. Since 2010, we have invested more than $1.2tn in the US and over €250bn [£215bn] in Europe. Coupled with low margins, this investment will naturally result in a lower cash tax rate, particularly when measured as a percentage of revenue.' A spokesperson for Meta said: 'We follow international and local tax rules, ensuring that we pay all taxes required in each of the countries where we operate.' A Netflix spokesperson said: 'Governments determine tax rules and rates – and companies comply with them. Netflix complies with the relevant tax rules and regulations in every country in which we operate.' Microsoft, Alphabet and Apple were all approached for comment.
The Guardian
07-02-2025
- Business
- The Guardian
UK urged to close tax loophole to prevent ‘massive influx' of Shein and Temu goods
Tax campaigners have joined retailers in urging the UK government to close a tax loophole to prevent a 'massive influx' of cheap goods from companies such as Shein and Temu flooding the market. It comes after the EU said it was joining the US in phasing out an exemption on customs duties for low-value parcels that has been used by the companies to export goods from China cheaply. The rule changes are seen as likely to hit trade into the EU and US by marketplaces such as Shein, prompting a report by Reuters that the online seller will have to cut the valuation of its hoped-for London stock market listing to $50bn (£40bn), about 20% below previous expectations. Paul Monaghan, the chief executive of the Fair Tax Foundation, said that in the light of the rule changes in the EU and US, the UK 'can expect a massive influx of even more Shein and Temu products,' unless action was taken. 'The government needs to tighten the gaping UK VAT and import tax loopholes as soon as possible to protect consumers and keep the high street alive.' Andy Higginson, the chair of fashion retail group JD Sports, said the government should close the loophole to ensure there was a 'level playing field' for all retailers in the UK. 'We don't want anyone to have an unfair advantage,' he said. 'There is also a moral case for paying tax in the UK if you are taking money from UK consumers and to contribute to schools and roads and other things.' Andrew Goodacre at the British Independent Retailers Association said it had already raised the issue with the government, arguing that 'the UK government must follow suit' after the US and EU rule changes. 'For a government 'pleading poverty' it seems crazy to miss out on a huge income opportunity by charging duty on millions of products that contribute nothing for the UK economy – all the money goes out of the UK,' he said. Julian Dunkerton, the boss of the fashion retailer Superdry, also called on the government to rejig the rules, which he said were designed to help small companies and individuals import items and not meant to apply to large operators such as Shein. He said the rules needed to be adapted so that those sending thousands of parcels worth, in total, a large amount of money each year would be subject to different tax rules. 'This is not about every small parcel being challenged, but consolidating people who go over a certain amount,' he said. 'It would be very painful for a very small company, say in France, to be subject to tax on every time.' Simon Roberts, the boss of Sainsbury's and Argos, the Next boss Simon Wolfson and Theo Paphitis, the owner of the UK retailers Ryman and Robert Dyas, have previously called for the government to change the rules. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Donald Trump has said he will eliminate the US's current $800 'de minimus' limit under which customs duty is not payable for goods coming from China, and potentially Canada and Mexico. In the EU has also said it is moving forward with plans to ditch its €150 (£126) threshold for import duty. In the UK the threshold for import duty is £135, while items valued at £39 or less also do not attract import VAT. Brad Ashton, the customs and international trade partner at the advisory company RSM UK, said: 'If these goods aren't being imported into the US, other jurisdictions, such as the EU and UK, could see an increase in cheap goods flooding the market.' He added that the threat of 10% tariffs on Chinese goods imported into the US may also affect UK retailers if stock is made in China but fulfilled and shipped from the UK. 'The goods will still be subject to tariffs due to the origin of the goods which could present a double blow to UK retailers,' he said. An HM Treasury spokesperson declined to comment on whether any changes to UK rules were being considered. 'Our customs and tax regime balances reducing burdens for businesses and consumers buying lower-value goods from overseas with the interests of UK businesses,' the spokesperson said.
