(Bloomberg) -- The European business of coffee chain Starbucks Corp. paid an effective U.K. tax rate of 2.8 percent last year after a payment from another part of the company boosted profits, the Financial Times reported.
The company paid $5.9 million in U.K. taxes on a profit of $213 million in the year ended October 2017, down from earnings of $219 million a year earlier, the newspaper reported. The annual figure was inflated by a $150 million dividend from another Starbucks entity on which tax had already been paid, the FT said. The U.K. corporate tax rate is 19.5 percent.
Starbucks, with 3,000 stores in 40 countries, and Internet retailing giant Amazon.com Inc. have both been picked out for using tax structures that may give them advantages over smaller rivals. The companies have been seen to engage in “complex international tax planning” that isn’t available to local stores and independent coffee shops, Andrea Coscelli, chief executive officer of the U.K.’s Competition and Markets Authority, said earlier this month.
Starbucks reduced its bill in part by paying employees in shares, according to the report. The company’s accounts for Europe, the Middle East and Africa also cited the “tax effect of expenses that are not deductible in determining taxable profit” for the reduced rate, the FT said.
Starbucks had earlier said that its effective U.K. tax rate was 3.5 percent, and the company has since said that figure was wrong, the FT said.
To contact the reporter on this story: John Lauerman in London at jlauerman@bloomberg.net
To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net
©2018 Bloomberg L.P.
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