Starbucks has been accused of transferring more than $1.3 billion in profits through a subsidiary in Switzerland over the past 10 years to take advantage of low tax rates.
Starbucks cups are pictured on the counter at a store in Manhattan, New York - Photo: REUTERS
According to Business Insider , a new report from the Center for International Corporate Tax Transparency and Accountability (CICTAR) shows that Starbucks Coffee Trading Company (SCTC), a subsidiary of Starbucks in Canton Vaud, Switzerland, has shifted profits and minimized the amount of tax payable over the past 10 years.
Evidence shows that since 2015, this subsidiary has shifted about $1.3 billion of Starbucks profits out of high-tax countries.
The subsidiary was responsible for purchasing unroasted coffee beans from various countries and reselling them at a higher price to other Starbucks branches. The markup increased from 3% to 18% between 2005 and 2014, creating a huge profit but taxed at a very low rate in Switzerland.
The report also stressed that although the coffee does not actually pass through Switzerland, the profits from these activities are still recorded and are taxed at a much lower rate than in the US and other countries.
While the exact tax rate Starbucks pays in Switzerland is not public, according to analysis by the Institute for Taxation and Economic Policy (ITEP), US companies pay an average of just 3.9% in tax in Switzerland, compared with a 21% corporate tax rate in the US.
In addition, during the period 2015 - 2021, Starbucks Coffee Trading Company (SCTC) paid annual dividends of between 125 million and 150 million USD to another Starbucks subsidiary, Starbucks Coffee EMEA BV, based in the Netherlands, and these amounts were not taxed when leaving Switzerland or entering the Netherlands.
Mr. Jason Ward, an expert from CICTAR, affirmed that although there is no specific evidence of illegal acts, this financial strategy of Starbucks has become the focus of criticism in terms of ethics and social responsibility.
"Starbucks is different in that they have built an image that they are socially responsible," Ward told Business Insider .
Responding to the allegations, a Starbucks spokesperson said the company fully complies with tax regulations in the countries it operates in. Starbucks also said its subsidiary (SCTC) is based in Switzerland to leverage its expertise in international coffee trading in that country.
The CICTAR report also pointed out that similar tax avoidance strategies are being used by many other multinational corporations, to minimize their legal tax liability.
“Tax avoidance by large companies ultimately increases the tax burden for other taxpayers, including individuals and small businesses,” said Matthew Gardner, senior fellow at ITEP.
Source: https://tuoitre.vn/starbucks-tron-1-3-ti-usd-tien-thue-20250312152653325.htm
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