Starbucks faced a major public relations problem in Britain over its tax avoidance practices. Public relations problems can arise as a result of aggressive tax starbucks coffee company transformation and renewal pdf practices. Accounting and tax decisions need to be aligned with overall corporate goals and image. This instructional case is designed to explore how accounting choices, and specifically tax minimization practices, should consider a company’s overall strategy and positioning within multiple stakeholder groups.
However, in its 15 years of operations in the UK, the company had paid UK corporate income taxes only once. Starbucks UK had effectively shifted taxable income to other Starbucks subsidiaries where it would be taxed at lower rates. In 2012, Starbucks in the UK faced a public relations furor over its failure to pay British corporate income taxes. While the tax avoidance practices Starbucks used were common among multinational companies, Starbucks had been very public in its commitment to being socially responsible and a good citizen of the communities in which it operated. This included, among other aspects, paying fair wages to employees and paying fair prices to coffee growers in developing countries.
Thus, its critics found it easy to point out that not paying its fair share of taxes was inconsistent with the image Starbucks was portraying to consumers. Check if you have access through your login credentials or your institution. Coffee is a truly global commodity and a major foreign exchange earner in many developing countries. The global coffee chain has changed dramatically as a result of deregulation, new consumption patterns, and evolving corporate strategies. From a balanced contest between producing and consuming countries within the politics of international coffee agreements, power relations shifted to the advantage of transnational corporations. A relatively stable institutional environment where proportions of generated income were fairly distributed between producing and consuming countries turned into one that is more informal, unstable, and unequal.