A report by a corporate tax research center alleges that Starbucks used a Swiss subsidiary to avoid taxes on more than a billion dollars in profit over the past decade.
The Centre for International Corporate Tax Accountability and Research, or CICTAR, showed that Starbucks purchased green coffee using the Starbucks Coffee Trading Company (SCTC), a subsidiary based in Switzerland.
Without ever receiving delivery, SCTC then resold the coffee to Starbucks subsidiaries in other countries at a markup. Profits from those markups were taxed at a lower rate in Switzerland than they would have been had they been taxed in the receiving country, the report alleges.
This technique is known as “profit shifting” and is commonly used by multinational corporations to move profits from the countries where they produce and sell goods into a tax haven. While most such strategies are not illegal, the Organisation for Economic Co-operation and Development (OECD) describes them as “undermin[ing] the fairness and integrity of tax systems.”
While the report found no indication of illegality, Jason Ward, principal analyst at CICTAR, told Alex Bitter at Business Insider that these actions go against Starbucks’ reputation as a progressive company. “Starbucks is different in that it really does bank on its image of social responsibility,” Ward said.
Starbucks responded to the claim, which was included in CICTAR’s report. They say the findings “fail to accurately reflect our business model and how different parts of our business contribute to the company’s success.” A spokesperson told Business Insider that the company “is in full compliance with tax laws around the world.”
Read the full story from Business Insider here.
