Remember all that fuss about Starbucks and the way that it paid a 20% margin to Switzerland for the coffee beans? A terribly naughty attempt to dodge the British corporation tax righteously due we were told.
Or, as others put it, and entirely normal margin being paid on an inter-group transaction. For the Swiss corporation must, in a world of anything even pretending to be arms length transactions, make a profit or a margin.
But the interesting thing today is how important is this number?
Cost of actual coffee in a medium £2.20 cappuccino amounts to 8p
Hmm. So coffee is 4% of turnover? Not accurate but it’s a reasonable guess, it’ll give us something like the right order of magnitude at least. And that horrible margin paid over to the dastardly tax dodging Swiss was 20% of that. So, 0.8% of turnover.
Turnover was £400 million or so. The gross amount of that margin paid over to the Swiss in an attempt to dodge taxes was £3.2 million then.
And, as I’ve explained before, even when you add that back in then Starbucks was still making a loss.
Remember, the complaint is about the 20% margin paid on that coffee bill, not the coffee bill itself. Everyone, at least I hope everyone, accepts that the coffee bill to a chain of coffee shops is an allowable expense.
So that margin is £3.2 to £4.8 million.
Which is still less than the £5 million loss which means that the reason Starbucks don’t pay tax on its profits in the UK is because it don’t make a profit in the UK.
Something which, if I’m honest about it, seems reasonable enough really.
And UKUncut can fuck off ‘n’all.