An Open Letter from Kris Engskov of Starbucks

Subject: An Open Letter from Kris Engskov of Starbucks
From: Kris Engskov - managing director Starbucks Coffee Company UK
Date: 7 Dec 2012

Today, we’re taking action to pay corporation tax in the United Kingdom– above what is currently required by tax law. Since Starbucks was founded in 1971, we’ve learned it is vital to listen closely to our customers – and that acting responsibly makes good business sense.

Over the more than 14 years we’ve been in business here in the UK, the most important asset we have built is trust. Trust with our partners (employees), our customers and the wider society in which we operate.

The fact remains that Starbucks has found making a profit in the UK to be difficult. This is a hugely competitive market and we have not performed to our expectations over the many years we’ve been in business here.

It has always been our plan to become sustainably profitable in the UK. We annually inject nearly £300 million into the UK economy and are exploring additional initiatives to expand our growth and speed our way to profitability in future.

And while Starbucks has complied with all UK tax laws, today we are announcing changes that will result in the company paying higher corporation tax in the UK. Specifically, Starbucks will not claim tax deductions for royalties and standard intercompany charges. Furthermore, Starbucks will commit to paying a significant amount of tax during 2013 and 2014 regardless of whether the company is profitable during these years.

Starbucks will continue to open our books to HM Treasury and HM Revenue and Customs on an ongoing basis to ensure our financial performance and tax structure is transparent and appropriate.

The commitments Starbucks is making today are intended to begin a process of enhancing trust with customers and the communities that we have been honoured to serve for the past 14 years. And we will do even more. Our contribution will increase as we train over 1,000 apprentices over the next two years and pursue a series of initiatives that will increase employment and investment.

We know we are not perfect. But we have listened over the past few months and are committed to the UK for the long term. We hope that over time, through our actions and our contribution, you will give us an opportunity to build on your trust and custom.

Yours sincerely,
Kris Engskov, managing director, Starbucks Coffee Company UK