It appears that Starbucks' voluntary donation of £20 million in corporation tax has made the waters murkier, not clearer:
Starbucks said it will make the corporation tax payment even if it makes no profits in the UK – however, there is no legal basis for the company to make such a payment.Oh dear. The rule of law comes back to bite the UKUncut folks in their bottoms! This is the problem when you insist that companies and people adhere to the "moral" position - this is sometimes a way from the "legal" position - and if companies don't follow the law, where are they?
At least, if it can't voluntarily pay tax, Starbucks can make a charitable donation to the UK. Problem solved!
Suggestions have been made that bosses could make a charitable payment instead. However, the company could claim this back against tax.Oops. So it would shift tax payments from (say) the USA to the UK. The company would not necessarily be paying more tax. (Say, $1 million annual profit, taxed at 25%; $250K. UK charitable donation of $100K, roughly profit attributable to UK. That comes off taxable profit, so only $900K taxed at 25%; they pay $100K to the UK but save $25K in tax they don't pay in the USA, so they pay the USA $225K and the UK $100K. I wonder how the US tax authorities view this? More to the point, I wonder how the shareholders are going to view this?
Chris Morgan, head of tax policy at KPMG, said: "A charity payment has to be claimed against tax."