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Treasury secretary and London mayor argue over Starbucks’ tax

London mayor Boris Johnson defends Starbucks’ tax avoidance scheme following allegations by Treasury chief secretary it treats tax like a church collection plate

10 Dec 2012 Accountancy Age

By Rachael Singh

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STARBUCKS' tax liabilities has led to the chief secretary of the Treasury and the mayor of London arguing over the coffee chains' avoidance schemes.

Cabinet minister Danny Alexander has waded into the saga, claiming the coffee chains treats tax like a "church collection plate", The Daily Mail reports.

However, mayor Boris Johnson defended its position, saying – as with all companies – it has a duty to shareholders to minimise the level of tax it pays within legal parameters.

The argument comes months after it was revealed Starbucks has not paid any corporation tax in the last three years. However, the coffee chain will now pay a "voluntary" £10m a year in a deal recently announced by HM Revenue & Customs.

Alexander said tax "is not a voluntary choice for corporations", adding "it is not something you can just chose to do willy-nilly because you think it will please your customers; it is an obligation".

However, Johnson hit back: "Imagine you are the corporate finance director of one of these companies. Your job is to look at the law as it stands. Your fiduciary duty to your shareholders is to minimise your tax exposure."

Google, Amazon and Microsoft were all dragged into the tax avoidance argument this year. Starbucks, Amazon and Google gave evidence at a public accounts committee as to why their liabilities were so low.

Chancellor George Osborne announced in his Autumn Statement this month that he planned to reduce corporation tax from its current 24% to 23% next year and 21% in April 2014.

His message is that the UK is open for business, with one of the lowest corporation tax rates in the world, but every company must pay its fair share.

In the UK, tax avoidance is legal and evasion is illegal. 

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