So now we know: the sickly sweet smell that hits you when you go into a branch of Starbucks does not emanate only from their coffee.  The nauseating stink comes all the way from Seattle, where the company is based. It is the stench of corporate hypocrisy. Starbucks is a global corporation, second only to McDonald’s in the world, with a billion-pound business in Britain.  Yet we are told the company has paid practically no tax here since it began trading 14 years ago. So much for the ‘ethics’ and ‘responsibility’ that it boasts of on its website.  For millions of Britons, Starbucks is synonymous with the steaming cups of frothy latte and cappucino that we carry around everywhere. The American chain dominates our High Streets, occupying the role in social life once played by Lyons Corner House. Though Starbucks may sell lousy coffee — try their new Halloween concoction, Pumpkin Spice Latte, if you doubt me — we have only ourselves to blame if we choose to buy it.  Their tea is even worse, mind you. They train their staff to serve tea with the string of the teabag tied around the cup — so that by the time you’ve untied everything and can remove the bag, the tea is too strong.   Still, the 735 Starbucks cafés in the UK do a roaring trade, amounting to £1.2 billion in the past three years alone. And the corporation tax bill?  Nothing. Zilch. Not a bean. How do they do it?  Last year, Starbucks posted a loss of £33 million on sales of almost £400 million. Yet John Culver, president of the firm’s international division, boasted to analysts: ‘We are very pleased with the performance in the UK.’ This seems utterly baffling to those of us who are not money men.  Tactic Yet the pattern of posting losses of its UK operations to avoid paying taxes, while telling the markets that the business is profitable, has been repeated over many years.  What is more, it is perfectly legal. But whether it squares with Starbucks’ claim to the moral high ground is another matter. Starbucks uses at least three ways of legally avoiding tax. The first is borrowed from other huge U.S. firms such as Google, which charge their own overseas subsidiaries royalties for the right to use its brand and products. Every time you buy a cup of Starbucks coffee, 6 per cent of the price is paid as a royalty to branches of the U.S. parent company, which may be based in tax havens. These royalties would normally count as profit here in Britain and be taxed at 24 per cent by HM Revenue and Customs — but since they go to a foreign branch of Starbucks, the UK taxman can’t get at them.  Similarly, Starbucks funds its UK operations through loans borrowed at high interest rates from another part of the firm. This depresses profits made in Britain — but boosts the global balance sheet. Another tactic is to use the supply chain to move profits out of Britain. The UK arm has to pay subsidiaries in Holland and Switzerland for buying and roasting its coffee beans. The roasting operation in Holland — where corporate profits are taxed at 25 per cent — contrived to make a tiny profit of 1.6 million euros on an annual turnover of 154 million euros.  But in Switzerland — where the tax rate is just 5 per cent — the profits are likely to be substantially higher, although under Swiss law Starbucks does not have to disclose them. It is these and other clever wheezes that combine to make the profits of multi-nationals vanish, as if by magic, as far as the taxman is concerned. Source: http://www.dailymail.co.uk/debate/article-2218762/Starbucks-tax-The-high-street-coffee-giant-paid-bean-UK-sales-1-2-billion.html