So Ritchie asks us to pitch in with ideas for the multinational version of the Fair Tax Mark:
If anyone wants to suggest methodology they’re welcome to do so but remember the focus is on:
transparency about what the business does
disclosing tax avoidance
And this is appended to a piece that states the following:
Much of Starbuck’s good work building up a positive corporate social responsibility profile over sustainability and support for fair trade products was undone when it was revealed to have paid no tax for 14 out of the 15 years it had been operating in the UK.
Excellent. So. let us consider whether Starbuck’s would gain any conceivable version of the Fair Tax Mark?
I think it’s fairly obvious that they would not given that the entirely manufactured furore about their non-payment of tax is being used as a justification for the existence of the Fair Tax Mark.
However, this is something of a problem as Starbuck’s really was making a loss and their accounts did indeed reveal everything that was necessary to check this. There were really only two things out of the ordinary at all. The first was payment of royalties for the brand name into a Dutch company. This is entirely normal practice, indeed we’ve EU law to tell us that it’s illegal to try and tax such payments at source. Hell, HMRC even reviewed the rate and it was adjusted to one they would prefer.
The second was the payment of a 20% margin to the coffee bean purchasing operation in Switzerland. Again, there’s nothing unusual or even dodgy about this. Some money should be paid as margin to a bean purchasing organisation. Not to do so would of course be manipulating transfer pricing regs. For any arms length supplier would clearly be trying to charge a margin on its services: thus a wholly owned one should as well.
All of this was entirely obvious in the accounts. As was the fact that even if you adder these back in then the UK arm was still making a loss.
Which brings us to an interesting question. If a company that had clear accounts, was not dodging tax, a company like Starbuck’s, would not get the Fair Tax Mark, then what use is said Mark? And if it would get it then how can anyone be using Starbuck’s as an example of why we need said Mark?