Starbucks paid a “derisorily low” £7.2m in UK corporation tax last year despite making a gross profit of £149m on sales of £548m in Britain. Its UK division, which has faced years of criticism for paying very little to the Treasury, paid £40.4m in royalty and licensing payments to a parent company, more than five times the amount it paid in tax to HM Revenue and Customs. That company, Starbucks EMEA, collects royalty payments from the UK and 42 countries across Europe, the Middle East and Africa. Starbucks EMEA paid a $325m (£257m) dividend to the coffee chain’s parent company in Seattle, according to accounts filed at Companies House on Friday. That helped Starbucks HQ make a global profit of $5.8bn. Howard Schultz, Starbucks’s billionaire former long-term chief executive, owns just under 2% of the company’s shares – worth just over $2bn. In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998, when it launched its first coffee shop in the country. In the year to October 2023, the UK division collected sales of £548m from 1,168 coffee shops in the UK, up from £449m the previous year. It opened 102 new stores over the year. Starbucks employs 5,682 people in the UK, up from 5,177 a year earlier. Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax. The previous year it made a pre-tax profit of £10.4m and paid £4.5m in tax. Claire Ralph, the director of Taxwatch, a thinktank that investigates tax compliance, said: “The UK corporation tax Starbucks paid is derisorily low – depressed by continued high royalty and licensing payments to offshore owners – our tax regime is failing to secure a fair share of the profits generated from the British market.” Starbucks EMEA paid $36.4m in tax on pre-tax profits of $141m while paying the $325m dividend to its Seattle parent. The EMEA division collected royalty and licence fee income of $407m in the year to October 2023. Starbucks EMEA has built up shareholder funds to more than $1.3tn. Paul Monaghan, the chief executive of tax transparency campaign group Fair Tax Foundation, said: “Starbucks’ main UK retail subsidiary maintained its tradition of paying small amounts of corporation tax in the UK, and this was once again down to the payment of hefty royalty and licensing fees to entities further up the corporate group. “In fact, these intra-company charges have more than doubled in recent years and serve to exert a strong downward pressure on the tax paid by the coffee shop chain in the UK. “Starbucks’ other UK subsidiary, which collects the royalty payments from across Europe, the Middle East and Africa is paying substantially more tax than in previous years – but there is no way of telling whether this is at fair levels as they still refuse to provide a breakdown of income, profits and taxes on a country-by-country basis.” The company did not respond to a request for comment on the low taxes paid compared with gross profits, or the reason for the large royalty payments. However, a spokesperson pointed to a line in the company’s accounts that said: “Starbucks UK Coffee Company paid a UK corporation tax charge of £7.2m (up from £4.6m in 2022) based on a profit before tax of £16.9m. This represents an effective tax rate of 42.4%.” Duncan Moir, the president of Starbucks EMEA, said: “We are immensely proud to have celebrated our 25th anniversary in the UK and EMEA this year. We are pleased to report another strong year of revenue growth, owing in large part to the dedication, hard work and relentless pursuit of excellence that our brilliant team of partners continue to deliver.”