Coffee chain rejected claims it threatened withhold £100m in retaliation for David Cameron’s public criticism of its tax stance
Starbucks has pledged to open 300 new British stores, as it denied reports it has threatened to withhold UK investment in retaliation for David Cameron publicly attacking the chain for tax avoidance.
The US coffee chain said it “remains fully committed to opening 300 new stores and creating 5,000 new jobs by 2016”.
Starbucks renewed its commitment to British expansion following reports its UK boss angrily stormed into No 10 Downing Street, after the prime minister appeared to single out the coffee chain during a speech attacking multinational companies’ tax avoidance.
The Sunday Telegraph said Kris Engskov, managing director of Starbucks UK, had threatened to withhold £100m of investment in the UK if Cameron continued to single out the coffee chain in the tax avoidance debate.
In a speech in Davos last week Cameron said tax-avoiding companies had to “wake up and smell the coffee”. Asked whether Cameron’s remarks were aimed at Starbucks, a No 10 spokesman said “the speech speaks for itself”.
Starbucks said Engskov, a former aide to Bill Clinton when he was US president, had “very constructive” discussions with Downing Street officials on Friday, but said the meeting was “long-scheduled” and not organised in reaction to Cameron’s speech.
“We do not discuss the details of our government meetings but can say that we do not recognise how it has been reported [in the Sunday Telegraph],” he said.
The Sunday Telegraph had quoted a source close to Starbucks as saying: “The PM is singling the business out for cheap shots, a company that, it should not be forgotten, has pledged to pay tax now and into the future.” Starbucks said the firm did not recognise the comments. The Sunday Telegraph stood by its story and said the quote is “completely accurate” and from a source “connected to the very top of the company”.
The US coffee giant, which has paid no UK corporation tax for the past three years, said: “Starbucks agrees with the prime minister that all businesses should pay their fair share. In the UK, we employ 9,000 people, contribute £300m a year to the economy and are forgoing tax deductions that will make the exchequer at least £20m better off.”
Starbucks has paid just £8.5m in corporation tax since it arrived in Britain in 1998 despite total sales of £3bn.
The Davos speech is not the first time the prime minister has appeared to publicly target Starbucks over its tax affairs. Earlier this month Cameron accused Starbucks, Amazon and Google of lacking “moral scruples” by seeking ways to minimise their tax payments to the exchequer.
He said he would put tax avoidance “right at the top of the agenda” of the UK’s presidency of the G8. “I want to make damn sure that those companies pay it,” Cameron said. “It’s simply not fair and not right what some of them are doing by saying: ‘I’ve got lots of sales in here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation.'”
Grant Shapps, the Tory party chairman, said the government has not singled out Starbucks. “I don’t think we would ever single out a single company but I do think companies in this country need to pay their way,” he told the Murnaghan programme on Sky News on Sunday. “I think they need to do what’s right as far as that is concerned and I think most people watching this would agree, companies should pay their fair share of taxation.
Shapps added: “That applies to that company and anyone else you care to mention. It certainly applies to millions of smaller businesses in this country.
“People who work very hard, build up their companies from scratch … are paying their fair share of taxes all the way through. The same rules have to apply to everyone.”
Cameron’s speech has already drawn an angry reaction from big business, with Goldman Sachs chief executive Lloyd Blankfein saying the criticism risked “criminalising every right-thinking person who organises his or her affairs in a sensible way”.