Politicians are chiming in on the latest corporate tax issue that is currently enveloping the Starbucks decision to pay 20m in corporation taxes. Specifically, the Mayor of London, Boris Johnson, has urged people to not sneer at the efforts that Starbucks is trying to make amends concerning the tax situation.
There is no doubt that Starbucks has come under intense scrutiny for the past three years for not paying any corporation taxes. Some liken the latest decision as a public relations move, but Mr. Johnson has stated that the company was showing “corporate responsibility” on an issue that is very delicate.
During the tenure of Starbucks in the last 14 years, the company has paid 8.6m in corporation tax, and nothing in the past 3 years, even though profits have been gaining each and every year with UK sales reaching nearly 400m in 2011.
Taxable profit figures has shown numbers to reflect profit only one time in the past, while the rest of the years reflected losses. To rectify the tax situation to the government and to the public, Starbucks plans to pay a significant amount of money towards the tax solution for the years 2013 and 2014. Estimates are figured to be around 20m to be paid by Starbucks.
Payment of past tax liabilities came at the expense of public discourse with the company when they found out how little corporation tax was paid by the company. Talks of boycotting the outlets may have led to a prompt decision in this case.
Other corporate giants have also been criticised in the aspect of not paying enough or any corporate tax, which include the likes of Amazon and Google.
The response from Mr. Johnson was that the tax issue is a very fluid and difficult issue to deal with. Finance directors are working within the confines of the present tax laws. The quote from Mr. Johnson is “I cannot exactly blame the finance directors of these companies for doing their job.”
Finance directors are hired to work within the present tax laws and minimising any tax obligations as much as possible. Mr. Johnson has said that government should look towards changing the tax arrangements as much as possible, but if companies show a responsible tax attitude, that they should not be sneered at.
Chancellor George Osborne has announced in the Autumn Statement that more money is being delegated towards the issue of tax avoidance and evasion so that tax issues on corporations can be remedied.
The goal of acquiring an additional 9bn in tax revenues is the target for each and every year.
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This article was provided by Tom, Tom is a huge blogging fan and loves to write about everything from Technology to finance on blogs that include hardcorepersonalfinance.com and even one of his on sites over at personal-finance-budgeting.co.uk
