Source: Starbucks
Although this post is
more finance related, I can't help but to share this
special report from Reuters, which uncovered some interesting facts about Starbucks’s
creative accounting methods.
Over the past 3 years, Starbucks's UK subsidiary has reported no profit and paid no income tax despite registering
£1.2 billion in sales. As guided by the reporter, tactics used by
Starbucks are perfectly legal and are being practiced by
multinationals all over the world.
Under the current UK tax
regime, companies such as Starbucks are allowed to pay royalties
to subsidiaries where country tax are much lower (i.e. Switzerland
- as low as 2%). In addition, Her Majesty’s Revenue and Custom (HMRC) also allows
companies to deduct intellectual property fees if firms can show that the charges
were made at “arm’s length”.
More interestingly, transfer pricing seems
to be a popular way for companies to minimize tax bill, by allocating some funds
generated in the UK to other subsidiaries in the supply chain, where corporate
tax are much lower.
Another way to cut taxes is through inter-company loans, where parent company will charge a high interest rate
on its inter-company loan, benefiting both companies in term of taxable income.
heh, i just realized that i haven't contributed any money to starbucks so far this year! or at least not directly :D
ReplyDeleteGood for you. I actually consume quite a lot of starbuck coffee...i think is time that I reduce my spending.
DeleteHaha.. so , are you a fan of Starbucks ?;P I am happy to say NO, NOT AT ALL. . . It's just way too expensive for me for some sugary, creamer-laden beverage with no nutritional value at all! ';D
ReplyDeleteI'm a coffee fan. I drink any kind of coffee but i usually have it in black - no sugar and no cream to be precise. =D
Deletei used to patron Starbucks every alternate day...but i realise it sucks all my moolah and gave me few pounds i don't need at all!
ReplyDeletenow i only go like once in a berry blue moon...kiamsiap jor now :/
Hehhee i usually go for the cheapest drink on the menu which is brew of the day =D
DeleteIf its legal, than nothing much can be done. Besides others are also following. I can't remember when was the last time I patronized Starbucks. I prefer the kurang manis teh tarik from mamak stall.
ReplyDeleteHeheheh i can't drink milk, so i usually order teh o kosong =D
DeleteI have Starbucks once a week. Cappuccino FTW!
ReplyDeleteHeheh is nice to pamper yourself once a week with a dose of hapinness =)
DeleteActually I think Starbucks quality has gone down the drain tremendously...
ReplyDeleteI actually prefer coffee bean. =) Starbucks coffee is a bit diluted for my liking.
DeleteI'm not exactly a Starbucks fan but more of a Coffee Bean one. Starbucks drinks are too sweet for my liking......
ReplyDeletesame here! high five! coffee bean is wayyyy better than starbuck!
DeleteIf the tactics Starbucks use are legal, there's nothing we consumers can do but boycott 'em. Luckily I don't patronize Starbucks that often.
ReplyDeleteLike Shirley, I'm more of a Coffee Bean fan too. Their coffee varieties suit me much better... especially their Cappuccino and Iced Blended Chocolate/Vanilla.
I'm a coffee bean fan too! The coffee quality is much better compared to starbucks.
Deletethat's why we study taxes in uni right..to learn how best to avoid paying back hard earned money to the ga'men..haha
ReplyDeletehahahahaa....but u know what, i don't pay attention in school, so all this are pretty new to me. i'll come look for you if i wanna lari tax =)
DeleteInteresting post...nice to see their ideas & how they play
ReplyDeletethanks amy =D
Deleteoppss... i have bought alot from starbucks..indirectly contributing eh?
ReplyDeleteLatest: CAUTION: It's Flaming!
well if you owned starbuck shares in the US, you will benefit from it =)
Delete